Bitcoin price falls below $2,100.00
Is history repeating itself?
Bitcoin prices were on huge upward trend and it appeared that nothing can stop it. Earlier this week the world’s most popular cryptocurrency has set a new record high, reaching $2.791,70 on Thursday. Analysts predicted that hitting $2.800 mark could start a 47% price correction. As it turns out, their statements weren’t far from the truth. As compared to Thursday, Bitcoin has lost 30% of its value. Some experts expect the prices to be pushed down to $1,470.
Altcoins have encountered the same situation: Ethereum, Ripple, Litecoin, Monero and Dash are losing their value even faster than the leader of cryptocurrencies.
At the time of publication, Bitcoin was trading for $ 2,005.48 U.S. Dollars. History shows that there could be an even bigger correction. Between October and December of 2013, Bitcoin price skyrocketed from $130 to $1,100, followed by more than just a correction. It was a prolonged decline, the price reaching $200 within a year. The next two years were full of slow, but steady, growth.
What’s affecting the price?
Despite an impressive record of bull runs, cryptocurrency is a an extremely volatile asset. The blockchain technology being fairly new results in price roller coaster. The market challenges the developers daily as new and unexpected issues may arise any time. Besides, not every trader has a full understanding of the nature of cryptocurrencies and its potential.
To support this statement, we have compared the charts for the last few months and noticed a strong pattern. The cryptocurrencies used in our comparison are similar but very different at the same time. Bitcoin is the most famous and widely recognized currency with a limited usage options. Ethereum is the new kid on the block, offering a fair number of appealing features for corporate clients. Ripple is mostly used by banks and financial institutions. Each one of the cryptocurrencies has its own target audience and its own specifics. That being said, it appears that their value changes following a similar algorithm. Such pattern indicates that digital currencies are simply tracking each other’s price.
What to expect as investor?
We have proved that the price swings are often being caused by emotional reaction of the community to any major events happening in the world. As a result, Bitcoin became a very volatile asset, changing its price up to 50% within a month. The analysts recommend investors to be morally prepared to lose everything. Does it mean that we gotta hurry and swap our Bitcoins for a more stable asset?
Bitcoin enthusiasts have plenty of reasons to not lose their faith in the king of cryptocurrencies. In 2014, the downward trend was caused by the collapse of the Bitcoin broker Mt.Gox. Back then, this particular exchange was handling over 70% of all transactions. Unlike Mt.Gox, modern Bitcoin platforms such as, for example, Cubits or Coinbase, have become much safer and stable. Not to forget that Bitcoin has been officially adopted in a number of countries and the regulators are setting the rules to protect its users.
The times when the only Bitcoin investors were the cryptography experts are over. Instability of the global economy makes the cryptocurrencies appealing for the masses, which means that their price will keep going up and down for quite a while. Even if blockchain ends up backing every aspect of our lives. It’s something we need to keep in mind when investing in Bitcoin, or any cryptocurrency at this point.