What’s Behind the Recent Cryptocurrency Price Falls?
Over the last twenty-four hours, many of the world’s major cryptocurrency including Bitcoin, Litecoin, Ethereum, and Ripple have suffered major price slumps once again. Understandably, both traders and investors are becoming concerned by what seems to be becoming a consistent, negative trend.
But, what do the financial experts believe are causing the value of cryptocurrencies such as Bitcoin to fall?
According to Forbes’ Billy Bambrough, the price of Bitcoin has been dropping over the last seven days since Bitcoin Cash was split in two last week, and Bitcoin SV and Bitcoin ABC were created due to the cryptocurrency’s developers and miners failing to come to an agreement over the coin’s direction. A hash war has been triggered as a result as the two new cryptocurrencies fight it out for dominance on the BTC network.
The hard fork has resulted in billions of dollars being wiped from the value of Bitcoin, Ethereum, and Ripple, and has led many experts to dismiss the idea of cryptocurrencies becoming a viable and reliable alternative for cash and card payments in future.
Although the price of Bitcoin temporarily settled at approximately $5,500 following last week’s sell-off, its value has fallen once again within the past twenty-four hours by 3% to less than $5,380, which is its lowest price since October 2017.
The cryptocurrency Ripple has also experienced a sharp fall of 6% and has pretty much written off the gains its made over the past few weeks. Ethereum has suffered the biggest loss (8%), leaving Bitcoin and Ripple (XRP) as the world’s first and second largest cryptocurrencies.
One of the “Big Four” auditors, KPMG, believes that cryptocurrencies require “institutionalisation” before they can prosper and become classified as real currencies. The company’s chief economist, Constance Hunter, says that the cryptocurrency market would be able to “grow and mature” in the “broader financial services ecosystem” (such as banks, broker-dealers, and payment institutions) were to more widely participate.
Hunter also says that both borrowers and lenders would not be willing to risk making cryptocurrency transactions while the values are so unstable.
Meanwhile, The Financial Times’ Jemima Kelly believes that the reason for the ongoing Bitcoin price slump is that the cryptocurrency has “become a victim of its own success”. In her column on 18th November 2018, Jemima says, “countless knock-offs” have undermined Bitcoin’s value.
Bloomberg has warned that the price of Bitcoin is likely to plummet further to as low as $1,500, which would be more than 70% less than its current value.
However, anyone who is hoping to see the cryptocurrency market recover may be temporarily reassured by the recent financial prediction made by the co-founder of Fundstrat Global, Tom Lee. Mr Lee believes that Bitcoin will end the year at $15,000, which is $10,000 less than his previous forecast but still higher than many other market experts’ predictions. He also expects that the price of Bitcoin will return to a breakeven point in which the cost of mining the cryptocurrency will once again match its value.
By Laura Kilby.