In what has been a really volatile week for Bitcoin, the Bitcoin price dropped below $800 today.
The European morning trade hours saw more than 10% tumble in Bitcoin prices. This is the first time the price has gone below $800 since December 21st.
Bitcoin, whose price had been soaring as a result of the world events like Brexit, the US election results, demonetization in countries like India etc. last year, peaked at $1,153 earlier this year.
There is a general consensus in the Bitcoin community that the frantic trading as a result of the Yuan devaluation at the end of 2016 propelled the prices too high too quickly. A lot of experts attribute at least part of a more than 100% run-up in bitcoin prices last year to Chinese investors, who have reportedly been using bitcoin to circumvent China’s strict controls on the movement of capital.
Some also believe that the price was driven beyond sustainability by speculation and was bound to be corrected down to stability somewhere between $800 and $1000.
The price has been dropping steadily since the People’s Bank of China issued a new statement regarding the usage of Bitcoin in the country and allegedly targeted BTCC in their comment. The press release issued by the PBOC caused a lot of panic and caused the Bitcoin price to take a serious nosedive across the Chinese markets.
This leads to issues like short- term profit taking, as was seen once the Bitcoin price closed onto the $1,200 mark. The levels achieved in 2013 before the Mt. Gox exchange collapsed proved to be the psychological barrier at which the price slide occurred.
In conclusion, a hike in Bitcoin price is definitely possible and sustainable but only if it happens while maintaining low volatility and steady growth, as pointed out by Vinny Lingham in his post . He further adds, “If we see Bitcoin spiking too quickly to say $4,000+ well before the end of the year, then I’m certain we’re going to see an accompanying crash, and then we’re back to square one.”