What may have been the hottest topic in the economic world just a mere couple of months ago has all but miserably failed in these recent weeks. Bitcoin, the famous currency in the cryptocurrency market has crashed hard, so hard that lost over $100 billion in value. Though some people may have seen this coming in the foreseeable future, many people did not believe the crash would happen this quickly.
The most popular cryptocurrency, Bitcoin, was at its peak in December with its value being worth $20,000 where now it down to $8,500. This means that if you bought Bitcoin for $1000 in December it would only be worth about $400 now.
So what exactly is the cause of this drastic drop in the value of Bitcoin?
There are many different theories as to why there has been such a drop but the biggest and most used theory is the regulatory crackdown by governments in other countries. Countries like South Korea and China are two of the most avid governments to try and crack down on the use of virtual currency. Countries like China specifically are trying to crack down on Bitcoin so they can be a risk free as possible. Such risks include unregulated money and also an outflow of money from the country. Unregulated money can cause many problems such as too much money being given out in the form of loans while the outflow of money is caused by moving money out of the country, possibly too much money. This move by China has caused prices to increase substantially. With some of the biggest bitcoin mining sites in China, it has reshaped the industry into inflated costs. The sudden drop in the bitcoin price may have spooked the market causing more people to sell their cryptocurrency.
There are many questions to ask about Bitcoin along with the many theories that come with it. Is Bitcoin forever drowning? Will It ever rise back to the top? How reliable is it? The one thing we know about the Bitcoin market is that is very malleable and can increase just as fast as it decreased.