Here are the top reasons why Bitcoin prices have dipped below $9000 nowTarush Bhalla
Once again, Bitcoin prices are making headlines.
Unlike the rhetoric last year, this year, Bitcoins are largely being called out for their falling prices.
Starting the year at a price of $13,860.14 according to research site CoinDesk, the price of one Bitcoin as of Friday was at $8,293.64, a drop of $758.94 over 24 hours.
To give a perspective, Bitcoin prices have fallen by approximately 38 percent since the start of this year.
And this fall is a big hit for Bitcoin enthusiasts, who were hoping that very soon, Bitcoins would be a part of the mainstream economy.
And, not just Bitcoin, other cryptocurrencies that rapidly gained popularity over the course of the year, are also in the red now.
At the time of publishing this article, the price of Ethereum had fallen 21.6 percent, while that of Ripple had declined 31.17 percent over 24 hours.
So what could potentially be the reasons for the fall in prices of Bitcoins? Here are some:
The curious case of Bitfinex and Tether
Experts think this may be the trigger point for the fall in prices of Bitcoin. A widely-used exchange called Bitfinex seems to be under fire for artificially hyping prices of Bitcoins. According to Bloomberg, Bitfinex was also subpoenaed by US regulator Commodity Futures Trading Commission.
Bitfinex has issued the virtual currency Tether, which is backed by the traditional US dollar (one Tether is worth one US dollar).
However, it has been noticed that hundreds of millions of dollars worth of new Tether have been created every time the prices of other virtual currencies have been taking a downslide. Further, the New York Times reports that Tether was used on the Bitfinex exchange to make big purchases of Bitcoin and other tokens, which helped push prices up.
Further, other media reports state the CFTC probe also causes worries that Tether may not actually be backed by the dollar as Bitfinex provides little evidence of the relationship.
So the inference is that Bitfinex might have created Tether to artificially hike prices of Bitcoins.
India joins the panic
In the past, multiple economies around the world have taken a strong outlook towards the cryptocurency market.
Last month, the French and German governments sought to take control of the cryptocurrency mania by clamping down on trading cryptos and creating new regulations for the same. Even South Korea was looking to take measures on the high octane cryptocurrency trading.
In an earlier interaction, Indian crypto exchange founders stated that looking at these clampdowns, there seems to be a sense of panic globally around the cryptocurrency.
And a new entry to these clampdowns is India. Finance Minister Arun Jaitley, while presenting the country’s annual Budget for 2018, said the Government does not consider crypto-currencies legal tender or coin, and will take all measures to eliminate use of these crypto-assets in financing illegitimate activities or as part of the payment system.
Reacting to this, Indian crypto exchange founders predict that this will cause fear and uncertainty in the minds of Indian investors and lead to a lot of them selling their crypto assets.
Facebook bans cryptocurrency and ICO advertisements
Earlier this week, in a move to bring more transparency on its platform, Facebook banned all advertisements which promote cryptocurrencies calling it, “financial products and services frequently associated with misleading or deceptive promotional practices.”
This has, in turn, had a cascading effect on the prices of the cryptocurrency.
However, Facebook isn’t one of the behemoths dropping the crypto dream. In the last week of January, global payments player, Stripe announced that it was putting an end to the product that enabled retailers to accept bitcoin as payment.
During the announcement, Stripe product manager Tom Karlo wrote "Empirically, there are fewer and fewer use cases for which accepting or paying with Bitcoin makes sense."
It has been said that in December the cost of mining one Bitcoin increased, pushing up the transacting cost of a Bitcoin.
Tarush is driven towards delivering unbiased and accurate reportage while engaging with as many mediums as possible to narrate a fresh perspective. Working for the past few years in the digital space with YourStory, he has covered the Indian technology ecosystem extensively, focusing on new age Fintech companies, while building strong connects within the industry.