ForexMinute.com – Few days before, we ran an article on our website explaining why Bitcoin should be out of its speculative phase, for once and all. We wondered if forming a “Bitcoin-only” ecosystem would help add organic growth to its community and use. As the coin is gradually approaching towards such a possible scenario, its early traders are possibly getting transformed into some expiatory lambs.
As known to everyone now, Bitcoin market price has literally crashed in recent days – 30% to be precise. This price behavior has created quite a havoc among a section of long-term traders. Ever since the Mt. Gox collapse, the Bitcoin price has been failing constantly in terms of value. In last 24 hours itself, the coin’s value in US markets touched its double bottom at $330, while indicating to go as low as $250 if the bearish trend continues.
Unlike the traders aiming for short-term trades, long-term traders are finding it difficult not to correlate Bitcoin’s growing ecosystem and falling prices. Earlier, Bitcoin has grown with several hype bubbles. At those times, this market was quite fresh for both novice and seasoned forex traders. Thus, a flow of regular investors was obvious. And now when we see those old good days, we will notice how this cryptocurrency managed to rise by over 1000% in few years, as its demand and supply grew exponentially.
Fast forward to present where the Bitcoin ecosystem is visibly growing, but is yet imbalanced when it comes to demand. A merchant, who wants to accept Bitcoin, doesn’t want to either keep it or buy it. He therefore hires a third-part payment processor to automatically convert his Bitcoin sales into a fiat currency he prefers. This merchant can be anyone from Dell to Expedia, but the one truth it ultimately reveals is the constant supply of Bitcoin against the lower demands. Therefore, the fall.
What further has worsened the Bitcoin market is mining operations. Reportedly, miners sold at least 3600 virgin coins to the market, which puts a great deal of downward pressure on the market. This is where supply surpasses the demand units. However, it doesn’t exactly mean that the price will be pushed towards destruction. This trend is nothing but a catalyst to form a bubble, which is created and terminated periodically. The over-supply problem might further end when Bitcoin block reward is halved in early 2017. Long-term investors, thus, must not lose hope this early.
But meanwhile, the industry needs to come together to create demand in the market. Until now, the Bitcoin ecosystem has hinted to be more towards selling level, while new investors are hardly to be seen anywhere. At its bottom, the Bitcoin market might increase the buying pressure, leading to the formation of another bubble. If you are looking forward to make a quick-buck off Bitcoin, now is not the time (maybe never as well).
The fall and fall of Bitcoin is temporary. Buy and support the technology.
To contact the reporter of the story: Yashu Gola at yashu@forexminute.com
As known to everyone […]