How the Bitcoin Bubble Burst Again
The most recent Bitcoin bubble burst has to do with a combination of factors. It is hard to put a finger on a single event or driver that brought prices down so drastically from a high of almost $20,000 USD just about 7 weeks ago. Among the most recent events that have generated some downward pressure are:-UK banks banning the use of credit cards to buy cryptocurrency.
-US banks recurring to similar measures as UK banks.
-China banning the use of foreign cryptocurrency trading platforms.
The Status Quo Fighting for its Life
This adds to recent declarations by French and German officials about cryptocurrency regulation, and a regulatory push from the South Korean government. The status quo forces – banks and governments – are fighting to preserve their power, creating a sense that Bitcoin and other cryptocurrencies will soon become illiquid. Nevertheless, this is a false notion. There are still many avenues to liquidate Bitcoin and other cryptocurrencies. Therefore, the Bitcoin bubble burst mainly due to the psychological effect that these status quo forces have created.Factors Overlooked
These are all exogenous factors that may have an impact on the price of Bitcoin but not necessarily on its value. In fact, those who take Bitcoin and other cryptocurrencies as just another tradeable asset, are overlooking other factors that are pushing the value of Bitcoin up. These include:-Lower transaction fees – they fell to a range between $1 and $2 USD per transaction from highs of $15 and above a few weeks ago. Transaction fees fell more than Bitcoin prices!
-The Lightning Network is gathering steam with more nodes and tests, which bodes well for Bitcoin scaling issues.
Bitcoin Bubble Burst V2.0
Therefore, the latest headlines about how and why the Bitcoin bubble burst, are just recycled versions of what we have heard hundreds if not thousands of times before. The phenomenon might seem more apocalyptic now precisely because of Bitcoin’s success. As prices increased rapidly, Bitcoin garnered new users and attracted the attention of more banks and regulators. Many of these users were in it for the price or were just speculating. These users are cashing out based on the information coming out of mainstream media about banks and governments tightening the noose around Bitcoin’s neck, which brings prices down. Developers, believers and those who understand that Bitcoin is an alternative to corrupt financial systems, continue to drive its value up.source: Bitcoin Chaser, mybtccoin.com