Speculation shows doubts about bitcoin and digital money

The bubble of the popular cryptocurrency explodes, which loses 30% in just two weeks and goes to September levels of last year

In September of last year, JP Morgan CEO Jamie Dimon was criticized for saying that bitcoin was "a fraud". Then, the most popular cryptocurrency in the world quoted around $4200 and nothing presaged that in the next three months was going to shoot up to close $ 20,000. But this week, bitcoin has returned to trading below $ 4,200, and what is worse, in the middle of a market dominated by panic vendor, in which the supports are butter and where nobody explains how it has burst of the most brilliant bubbles in history. From the maximum of December the collapse arrounf 80% , although the punishment has been widespread for all cryptocurrency, which lost in these eleven months 700,000 million dollars in capitalization.

Things started to turn around since December, when the bitcoin futures market began to operate, which allowed short or lower trading against the currency. From here, the bearish drip has been constant, but without panic. And although the experts are not clear about the reasons, there is a certain consensus that the trigger for the last massive sale has been the hard fork ('hard fork', in the jargon) that occurred last week in bitcoin cash, a turn another split of the bitcoin itself.

Two new currencies have come out of here bitcoin abc and bitcoin sv but the problem is that the split has forced many miners (the people who keep the network afloat) to position themselves in favor of one or the other. Therefore, analysts assume that these miners would have sold their bitcoin to exchange them for cash, waiting to see who wins this battle. And this would explain the falls, which also coincided with the loss of support (very relevant) of $ 6,000. "The specific events of cryptocurrencies have led to greater uncertainty in the market, including the controversial split of bitcoin cash.

And the break of bitcoin below $ 6,000 has generated a new wave of pessimism, "says Thomas J. Lee, managing partner of Fundstrats Global Advisors. By losing $ 6,000, "they have seen many 'stop loss' jump, which accelerates losses," adds Marc Ostwald, strategist at ADM Investor. And also, "it does not help that we have an environment that is genuinely adverse to risk, with actions under pressure", says this expert.

The bifurcation is a widespread explanation of the falls, but it is not clear either. In fact, as explained by Benito Arruñada, Professor of Business Organization at Pompeu Fabra University (Barcelona), "bifurcations should not necessarily be a problem, and moreover, they provide a new automatic control mechanism for the market". To understand us, Arruñada stresses, "it is as if in corporate governance we had a permanent thread of taking that also included an immediate division of assets at market price." In addition, this expert is clear that the drop in the value of cryptocurrencies at this time "is more related to speculative investments than their value as a basis for new business models."

Legal issues

As if that were not enough, there are always legal problems. On Monday, it was learned that the regulator of the US markets, the SEC, has imposed two fines of $ 250,000 to two cryptocurrency companies that did not register their initial quotation offers (known as ICOs) as if they were securities. Justin Lichtfield, of ProChain Capital, believes that "mass sales have to do with this application of the law", and in the same vein, Bram Cohem, co-founder of Chia digital currency, adds that "ICOS are trying to change all their crypto currency for cash before the SEC falls on them ».

And to top off the bad news, on Tuesday it became known that the US Department of Justice was investigating whether the epic rally that took place at the end of last year could be partly due to price manipulation through a plot that would involve the Bitfinex broker and the popular but controversial cryptocurrency Tether. Bitfinex has the same managers as Tether and what the prosecutors suspect is that these Tether crypto currencies could have been used to buy bitcoin just in the moments when bitcoin suffered more falls, according to Bloomberg.

Difficult technical aspect

From a technical point of view, what is clear is that the bitcoin prospects are quite bleak. "The breaking of the $ 6,000 has accelerated the cuts and has gone to test the support of $ 4,500," says the investment analyst, Josep Codina. A similar diagnosis arrives Eduardo Bolinches, a contributor to Finanzas.com, when he points out that we are facing a "clear bubble structure, explosion and consolidation before the last blow, which has begun after losing the area of ​​$ 6,000."

So things, says Codina, "the theoretical pattern of correction still widens the path to the downside, first up to $ 3,600 and after this level, there are scant support references to the area of ​​$ 2,000

Date update on 2018-11-27. Date published on 2018-11-27. Category: bitcoin Author: Oscar olg Fuente: burgosconecta