Bitcoin prices have seen incredible volatility in the last few weeks, but they struggled to go above $14,300 on Wednesday as prices fell nearly 6%. Bitcoin was trading above $17,000 last week, but fell below $14,300 on Wednesday. To put things in perspective, the bitcoin market capitalization has plunged from $294 billion on January 7 to roughly $240 billion on Wednesday. The falling prices might be reflecting more than just risk and volatility. The bitcoin bubble might be about to burst.
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China, South Korea’s moves worry bitcoin miners
JPMorgan CEO Jamie Dimon says he regrets calling bitcoin a “fraud.” Kodak has also announced that it would install bitcoin mining systems in Rochester, and would launch its own version of bitcoin called KODAKcoin. While almost everyone seems to be going crazy for cryptocurrencies, central bankers might be secretly plotting to burst the bitcoin bubble. And the threat seems real because they have already been dropping hints.
We have to understand that bitcoin, Ripple, Ethereum, and other cryptocurrencies are digital currencies. But investors have been treating them as an investment rather than a currency. They are betting on or against cryptocurrencies to make quick bucks. They are jumping in and out of the market as market sentiments change. Bitcoin would gain momentum if more and more people use it as a monetary tool rather than as an investment.
South Korean regulators have said they would now more closely monitor the cryptocurrency market. The primary reason bitcoin and other cryptocurrencies became so popular is that they are unregulated by governments. People could use them anonymously. But the South Korean government is planning to ban the anonymous cryptocurrency accounts and even provide measures to shut down exchanges if needed.
China is also tightening the grip on bitcoin miners. The world’s most populous country mines nearly 75% of the world’s bitcoins. According to the Financial Times, a multi-agency task force has asked provincial governments in the country to get the bitcoin miners to “exit the cryptocurrency mining industry.” Officials cited the excessive electricity consumption and financial risk as reasons China wants to “eradicate” its bitcoin mining industry.
