Within the past weekend, Bitcoin has fallen drastically to $7,335.57, at its lowest on Sunday. Fortunately, as CoinDesk conveys, the value of the cryptocurrency gradually recuperated. By Monday afternoon, the value of Bitcoin picked up again returned to an average of $8,585.
Although we can never know for certain the reason underlying such change, many have pointed to the advertising ban of bitcoin throughout the weekend. Sky News has reported the advertising ban for initial coin offerings, token sales and cryptocurrency wallets all across the world that Twitter has supposedly imposed and will be implemented within a fortnight.
Another one of those attempts to reprimand cryptocurrency scams, this move is not unheard of. Several tech giants have already imposed strict rules and regulations on these advertisements early on. In the start of the year, Facebook, runner-up to the world’s biggest online advertisement platform, has announced its plan to impose bans on all cryptocurrencies-related advertisements. Its reason for taking such drastic measures is to avoid circulation of “financial products and services frequently associated with misleading or deceptive promotional practices”. Moreover, just last week, Google has announced its plans to reinforce the financial services policy. Hence, advertisements circling cryptocurrencies, and such will be curbed within three months.
“Facebook was previous, but now Twitter is also rumored. Much of crypto(currency) demand is retail, so this may negatively impact demand,” suggests Joe DiPasquale, the Chief Executive Officer of BitBull Capital.
The former statement remains to be unsubstantiated as Twitter has not disclosed anything.
There was considerable news pointing to the high price of mining as the underlying cause of the fall in bitcoin’s value since last week. That was reiterated by DiPasquale, “Now that it’s dropped below that, there’s less incentive for miners to continue to keep machines on unless they are in a lower-cost energy area or have a way of producing at less than cost”.
The mining of bitcoin includes the utilization of certain software and expensive hardware to solve mathematics equations in order to earn bitcoins. With the current rate, they are now looking at a mere $8,000 for one bitcoin. This, in addition to regulatory issues, have largely impacted the value of bitcoin within the past few weeks.
Initially valued at a fine five figures of $11,000 just a couple of weeks ago, a statement issued by the Securities and Exchange Commission (SEC) expressing its concerns over cryptocurrency exchanges as well as the lack of security and privacy on Binance, a Hong Kong-based cryptocurrency exchange momentarily brought down the value of bitcoin.
According to the grapevine, finance ministers of G-20, as well as governors of central banks, have agreed to consolidate in Buenos Aires, Argentina. A G-20 representative has informed CNBC that these discussions will take place in a private and confidential setting before making its way to the press conference.
The Financial Stability Board (FSB) serves as a regulator for G-20 economies all across the world. They have begun to take actions after receiving a number of calls from various countries regarding the security of cryptocurrencies.
“The FSB’s initial assessment is that crypto-assets do not pose risks to global financial stability at this time,” proclaims Mark Carney, Chair of the Financial Stability Board as well as Governor of the Bank of England.
“Even at their recent peak, their combined global market value was less than 1 percent of global GDP,” Carney continues in an effort to juxtapose the size of cryptocurrency investments with the rest of the global financial system.
“The more speculative coins are being hit particularly hard. Liquidity is among their primary features and many of the holders lack long-term conviction, therefore they’re rotating into larger coins with stronger long-term prospects,” asserted by Spencer Bogart, one of the partners of Blockchain Capital.
He underlines the “potential for a liquidity crunch” as phrased by CNBC. He believes that to be the decisive factor for investors to let go of alternative coins and focus on more prominent cryptocurrencies like bitcoin.
Bitcoin was not the only cryptocurrency that had experienced a fall over the weekend. Ethereum went down by an alarming seventeen percent, reaching a nadir of $460.09, as reported by CoinDesk. That, however, is nothing in comparison to Ripple, which has suffered a decreased of fourteen percent to a meek $0.55. Similarly, the value of bitcoin cash and Litecoin have both deteriorated significantly at about ten percent.
While it may seem like bitcoin may be making a comeback, as people lose confidence in these currencies, the value subsequently decreases, too. Should investors pull out now or continue to await more positive results?
Featured image via flickr/ Zach Copley