Damn.. That’s ugly.
As always.. It’s been a wild and interesting past few days for the burgeoning, young digital currency markets.. and of course, all eyes on Bitcoin.
Huge Crash.. Slight Recovery.
At the time of writing this, BTC has rebounded slightly up from that landslide of red you see above, and is hovering around the $750 range. This after losing around 50% percent of it’s value in just a few short days, dropping to as low as the upper $5xx range.
As Bitcoin presently remains mostly an instrument of speculation, it’s no surprise that such fluctuations in the market have become almost commonplace. The speculation is, of course, that Bitcoin and possible other cryptocurrencies, are going to become an increasingly disruptive force in the years to come.
We’re not currently there yet though, so Bitcoin remains highly speculative, and as such.. All it takes is one or two breaking news stories that are either bearish or are interpreted as bearish to case a massive crash like the one we’re seeing now.
Combine the news out of China, with the declaration of a bubble by Greenspan, and the move by two giant Chinese corporations to stop accepting Bitcoin as payment.. and well – It obviously pays to watch the news if you have any skin int BTC. Things can drastically change, literally, overnight.
By most accounts though, this particular market crash was caused mainly by China’s announcement that all financial institutions are prohibited from transacting in Bitcoin. While that certainly isn’t the news that the bulls were wanting to hear – It’s a far cry from the doomsday headlines coming from the likes of Bloomberg, Newsweek, and other big news outlets.
“China Banned Bitcoin!”
“That pretty much sums up all of the misleading article and blog headlines that have flooded out from the aforementioned online publications in the past few days. . And while, like already stated, this isn’t great news.. but China did NOT ban Bitcoin/s.
In fact, China basically legalized Bitcoins. Did anyone really think the Chinese government was going to come out and allow it’s financial institutions ( the foundation of their massive economy) to haphazardly trade Yuan for Bitcoin? Absolutely no surprise there.
What China said was that Bitcoin is to be treated as a commodity. Like gold. If Bitcoin even starts to step on Gold’s toes, then BTC at any price we’ve seen to date is going to seem far under priced.. and China left the door wide open for that to happen.
Will it? Well, that’s the trillion dollar question.
One thing’s for sure: The Chinese government holds enormous power when an entire market, with a capitalization somewhere in the tens of billions, hangs on their every word.
And now they know it.