President Xi
Many thought that the negative trend for the bitcoin price would take a turn a month ago after President Xi of China announced China’s full commitment to blockchain, in all parts of China’s economy. Triggered by this news or not, the bitcoin price rose rapidly and was up 42% in just a few hours. Top listing was in the aftermath of $10,500 per bitcoin.
This price increase did not last long, and the bitcoin price has been trending downwards since President Xi’s statement.
“Blockchain, not bitcoin”
Towards the end of last week, several Chinese government officials went out in the media, stating that even if they were to bet on blockchain, this did not include bitcoin and altcoins trading. It may have helped send the bitcoin price down and we are currently at levels we have not seen since May this year, around $ 7,000.
China has already begun actions against crypto-related companies, this time crypto exchanges. In Shanghai, the Chinese Central Bank (PBoC) announced that it will cut down on the crypto exchanges in the city.
An official statement shows that the central bank emphasizes that speculation about cryptocurrency has risen lately after the blockchain announcement was made public.
This has probably disappointed many, who thought that China would now lead the way into a new era of bitcoin and cryptocurrency.
Isn’t bitcoin profitable anymore?
Several point to the phenomenon of “miner capitulation”, as a possible explanation for the decline in the bitcoin price. This simply means that some miners turn off their equipment and stop mining bitcoin, as it is no longer profitable.
Here it is pointed out that the difficulty of solving the mathematical problems of a Bitcoin block recently went down. In fact, this was the biggest fall in difficulty so far this year. This may be a sign of fewer miners. However, it seems that the level of difficulty is rising again in recent days, contradicting the theory that miners are fleeing bitcoin.
An explosive start of 2019
Some of the reason for the price fall may also have a natural explanation. During the first 6 months of 2019, the euphoria was back, and bitcoin rose from around $4,000 to nearly $14,000. The speculation that bitcoin was again heading toward $20,000 was spreading.
In retrospect, this may look like a violent overreaction from a market that had been in a downward trend throughout 2018. A natural correction to a hefty price increase is not uncommon.
Is bitcoin dead – again?
The crypto market is still small, and it is difficult to say whether these price fluctuations are related to news, or for entirely different reasons. For example, there may be so-called “whales” sitting on huge sums of bitcoin, which sells off and triggers massive fluctuations in the market.
Sometimes it may be worthwhile to take a step back in such downturns that we are in now. After all, the price of bitcoin has doubled in 2019, and there have never been more players, and now also professional institutions, to drive the crypto industry further.