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Bitcoin drops below $6,000 for the first time since November

Spandan Sharma
6th Feb 2018
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If you’ve been living under a rock and are only just waking up to the whole Bitcoin phenomenon, you’d probably be forgiven for calling the world’s foremost cryptocurrency a terrible bet. After a truly spectacular 2017, 2018 seems to be nothing but bad news for the global Bitcoin community. The cryptocurrency sank to $5,992 earlier today for the first time in three months, continuing a steady downward trajectory since the start of the new year. The currency eventually rose again to $6,369 (at the time of writing this), but the damage had been done.

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Looking back, it can be a little difficult to imagine that Bitcoin hit a record high of over $19,000 barely six weeks ago. However, crackdowns by regulators and governments – including China, Russia, and South Korea – in these six weeks have severely dampened investor enthusiasm in the cryptocurrency space. Even India got in on the act when Finance Minister Arun Jaitley announced in the 2018 Union Budget that cryptocurrencies would not be considered legal tender in the country.

Matters have been made worse by a series of security alerts and hacks, including the recent one on Japanese currency exchange Coincheck, where hackers stole $530 million in virtual currency in the largest cryptocurrency robbery in history, as well as lingering questions about the possibility of fraud in exchanges like Bitfinex. Developments such as Facebook banning all cryptocurrency and ICO advertisement on the platform have not helped either.

Tuesday’s plunge was triggered by a global collapse in world stock markets, with the Dow Jones index marking its biggest one-day points loss, effectively wiping out all its gains from 2018. As per estimates, at the time of writing this, the massive selling by investors had wiped off nearly $4 trillion of value from global markets. Agustin Carstens, the new head of the Bank for International Settlements – the international “bank for central banks” – called Bitcoin a combination of “a bubble, a Ponzi scheme, and an environmental disaster.” Raising concerns about the incorporation of cryptocurrencies into the mainstream, he said, “If authorities do not act preemptively, cryptocurrencies could become more interconnected with the main financial system and become a threat to financial stability.”

While it is too early to claim these as the end-times for Bitcoin and other cryptocurrencies (there are still many new exchanges coming up and interest in driving-technology blockchain continues to rise), the continued fall in value has many investors wondering if jumping ship is a great idea right now. As concern and panic spread, the future of Bitcoin is anybody’s guess.

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