During the past few years, Bitcoin got lot of media attention and people saw the coin as an investment opportunity. Even so,during the past 6 months it experienced, what some might call, “a steep decline”. The diehard critics went further and said that Bitcoin is slowly dying. Most of them pretend that it’s only a matter of time until Bitcoin will vanish, they call it a Ponzi scheme.
Well, there are ups and downs in every industry, and market. Back in 2009, when the Bitcoin protocol first went live, the world was in turmoil. The 2008 financial crisis started and mortgages were defaulting on a never-before-seen scale.
Now that the Bitcoin price took a dive, everyone calls it “the end of Bitcoin”. Even so, it should be considered the fall needed to get back up again.
Bitcoin Decline vs. Correction
First, let’s find the answer to this comparison. It is a decline, then end of Bitcoin, or just a natural correction?
In mid-October, Bitcoin price increased by 10% over the weekend and it kept its upward momentum for the next 4 months. I don’t think anyone thought that a 300% increase in roughly 4 months it’s an organic and sustainable growth. It was a matter of time before the price would’ve started changing its upward movement.
Even though some people call it a decline, it is, in fact, a correction anticipated by many experts in financial markets. If we take a look at the 1-year chart, we’ll see that on a year-by-year comparison, the Bitcoin price increased by roughly 3 times.
In July of 2017, Bitcoin was hovering around the $2,000 milestone and it was starting its upward momentum. Nowadays, in July of 2018, it’s hovering around the $6.000 figure.
This being said, if you would’ve bought Bitcoin exactly one year ago, your investment would’ve tripled. I don’t think there’s any stock or bond that would’ve got you this return on investment.
This being said, the downward Bitcoin price trend it’s a correction rather than a never-ending decline. That’s because, as stated above, the rapid pump the Bitcoin price experienced between September and late December of 2017 was artificial. The media coverage had a big impact on the Bitcoin’s price. Not a day went by and there was at least 1 newsreel about this subject.
Now, the amateur investors ran away during the first drop, only the more experienced ones remained in the business. This will lead to a more mature market and maturity leads to stability and prediction.
The Price Volatility of Bitcoin
Cryptocurrencies, especially Bitcoin, the currency with the biggest market capitalization, tend to have a highly volatile price. It is not unusual to see the price going up or down by 10-15% in under 24 hours.
One of the main reasons for this volatility is the lack of regulations. This means that a pump and dump trick is feasible on the Bitcoin markets and this leads to an increased volatility.
According to Nigel Green, the founder and CEO of deVere Group, the Bitcoin market and the cryptocurrency industry overall, will soon start an upward movement.
“First, the world needs and demands digital currencies in a digital age, second, cryptocurrencies are beginning to be adopted by established financial institutions.
Third, household name retail and institutional investors are jumping on board the crypto train.
And fourth, regulation of the cryptocurrency sector is now becoming inevitable.”
Bitcoin Regulations and Impact
For the cryptocurrency industry to have an organic growth and a decreased volatility, they need to be regulated.
In the crypto industry, the regulations are considered mandatory, even though authorities don’t rush on creating and implementing such regulations. Here’s an example of how news regarding cryptocurrency regulations affect their prices.
In March of 2018, the U.S. Securities and Exchange Commission during a statement, highlighted the fact that cryptocurrency exchanges need to register in order to continue offering their services.
This announcement has led to a steep decline in Bitcoin price, investors were scared that exchanges in the United States of America would shut down and started selling.
Even so, during the past few weeks, the Securities and Exchange Commission, has become more friendly with the cryptocurrency industry and regulations can be foreseen in the future.
In conclusion, the authorities need to understand the importance of Bitcoin and other cryptocurrencies and the fact that they need to be regulated.
Technological Improvements of Bitcoin
The first thing you observe when a certain industry is on the verge of collapse is the lack of investments in technological improvements. That’s because it doesn’t attract clients anymore and these investments would be futile. Even so, the cryptocurrency industry doesn’t lack this kind of investments.
For example, the Bitcoin development team is now focusing on a very important issue: scalability. It is well-known that this is a very important limitation of the Bitcoin protocol.
The first improvement to solve this problem was the implementation of SegWit or Segregated Witness. This improvement has reduced the size of the scripts and signatures by 50%, thus a block will contain more transactions.
The second improvement, which is still to be deployed, is called the Lightning Network. It also focuses on the scalability problem and it’s meant to increase the number of transactions the Bitcoin network can operate, at once.
This being said, the Bitcoin development team is continuously improving the protocol and tries to make the technology more competitive and adaptive.
Conclusion: Is Bitcoin Dead?
Even though the past 6 months has led many people to believe that the end of Bitcoin is near, the cryptocurrency industry is here to stay. Authorities started to realize the importance of these assets and are collaborating in order to regulate them. Also, the Bitcoin development team is constantly trying to improve the technology and add new features to it.
In conclusion, it’s just a matter of time until Bitcoin will start an upward trend and will be the asset with the biggest growth once again. In these times, HODL is the best tactic for all the Bitcoin investors.