3 Big Reasons Bitcoin’s Price Is Struggling

After weeks of sideways price movement, bitcoin’s value plummeted by almost $500 this morning. Every other major cryptocurrency soon followed, with many losing around 10% of their total value. While erratic and unpredictable changes in price are nothing new in cryptocurrency — BTC unexpectedly fell by more than $1,000 in late September, for instance — being able to identify the root causes of a crash is relatively rare.

Today’s price drop may be different. The cryptocurrency market is in an unprecedented situation, having finally captured the attention of governments, central bankers, and regulators across the globe. This week, several of those factors collided. In this post, we’re taking a look at the three biggest factors pushing back against bitcoin’s price today.

1. Zuckerberg faces Congress: The obvious catalyst behind the price drop is today’s congressional hearing about Facebook’s Libra stablecoin. While Libra’s planned cryptocurrency-like payment system doesn’t have a direct connection to bitcoin, many cryptocurrency traders are concerned that the House of Representatives Financial Services Committee will take a generally adversarial position on any form of digital currency. That would be very bad news for bitcoin, and many traders are likely cashing out in order to hedge their bets. In a very real way, the immediate future of the cryptocurrency industry could depend on how well Facebook Founder and CEO Mark Zuckerberg navigates today’s hearing.

2. Ex-Trump administration official admits to popping 2017 BTC bubble: It’s no secret that President Trump isn’t a fan of bitcoin. Until yesterday, however, it wasn’t clear what his administration’s policy towards cryptocurrency actually was. In an interview with CoinDesk, former U.S. Commodity Futures Trading Commission (CFTC) Chairman Christopher Giancarlo revealed that “CFTC, the Treasury, the SEC and the [National Economic Council]” took actions in late 2017 that were specifically aimed at “popping the bitcoin bubble.” You read that right: The downward pressure on bitcoin’s price — and the prices of other cryptocurrencies — over the last two years has been, at least in part, a direct result of the Trump administration’s policies. Some traders may be taking this as a sign that bitcoin isn’t a wise investment under the current White House regime.

3. The SEC once again rejects another bitcoin ETF: Last week, the U.S. Securities and Exchange Commission (SEC) rejected a proposal by Bitwise to launch bitcoin-backed exchange-traded fund (ETF). While not surprising in itself — the SEC has denied every cryptocurrency-backed ETF proposal thus far — the decision included new details that paint a grim picture for any firm looking to grow the derivatives market for cryptocurrencies. The SEC’s report depicts the $200 billion cryptocurrency market as too small, immature, and prone to manipulation to merit consideration for an ETF in the near future. Given that ETFs are a popular tool for pension funds and other major investors to gain access to markets, the SEC decision could easily have a chilling effect on the so-called “institutional investors” that many major cryptocurrency firms have been courting over the past few years.

23rd October, 2019 / Category - News