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Bitcoin Prices Take a Beating

Article Summary:

  • Bitcoins has fallen to $450 after hitting a low of $310 on BTC-e.
  • News no longer moves the price in this cryptocurrency.
  • New regulatory efforts are hurting price action and the price has been falling.
Bitcoins are Losing their Allure
Bitcoins are Losing their Allure

The summer time swoon for the cryptocurrency known as Bitcoins continues. The price has fallen like a stone, $120 over the last week alone. As time goes on, Bitcoins will fall further as it becomes less and less sensitive to “good news.”

In early trade today, the price has fallen to a low of $450. Last week the price of Bitcoins stood at $571. On Monday, price hit a low of $310 on BTC-e (Bulgaria) before recovering to close at $460. Looks like we are in the middle of what is called a “flash correction” where we see large price movements.

What is odd, nobody seems to care. It was just a few short months ago that any number of negative headlines as well as positive headlines caused Bitcoins to appreciate nearly 8100 percent since 2013 to early December of 2014. Bitcoins seems to have fallen out of favor and the news cycle but as pending regulation efforts continue, there is a lack of opinion of what will happen next.

There are some valid reasons for this recent decline. One reason is thanks to margin traders who were caught in the price direction and then sold to cover margin calls. This sent prices even lower. Another factor in the recent price depreciation is the New York Department of Financial Services (NYDFS) “BitLicense” network. This action calls for a balance feedback to protect customers and seek out illegal activity. They are aiming to accomplish this without hurting innovation in the Bitcoins field. The initial framework suggests that regulations are stricter than they had intended, and this is bringing the price of the cryptocurrency lower.

Not even good news has helped. eBay has just announced they will accept Bitcoins as a payment method, and prices did not even rally. This is not a good sign. Since the cryptocurrency being used as a new method of payment, especially since it is not regulated or accepted as a currency worldwide, should have moved prices higher. On the other hand, as more and more merchants accept Bitcoins as a payment method, the price will move lower.

Why?

As merchants receive payment, they will sell them all at once to get cash. Since there are not enough buyers in the market right now, the price of Bitcoins will move lower. Supply and demand. There is a huge supply and little demand. Therefore, prices will move lower. The added regulation pressure will also not help matters, as consumers have 400 other digital currencies to choose from. The question on everyone’s mind is now: Has Bitcoins lost their allure? Digital currencies are the future but will it be Bitcoins?

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