BITCOIN’s price has plunged by about $25billion in the past 24 hours and the cryptocurrency looks set to suffer another disappointing day on the markets. But why is bitcoin (BTC) falling today?
The world biggest and best-known cryptocurrency slumped below the symbolic $10,000 threshold yesterday (Wednesday February 1), but its value crashed further overnight to about $8,600.
Bitcoin has fallen by more than 56 percent since the turn of the year, after peaking at nearly $20,000 in December 2017.
CoinMarketCap price charts show that bitcoin has been falling for weeks, though this latest crash has been blamed on mounting confusion surrounding the Indian Government’s stance on cryptocurrencies.
Yesterday, the Finance Minister Arun Jaitley spooked investors when he announced plans to “eliminate” the use of digital currencies for payment purposes.
He said: “The Government does not consider cryptocurrencies legal tender or coin and will take all measures to eliminate use of these crypto-assets in financing illegitimate activities or as part of the payment system.
“The Government will explore use of blockchain technology proactively for ushering in digital economy.”
Ajeet Khurana, head of the Blockchain and Cryptocurrency Committee of India (BACC), has clarified the situation somewhat, arguing that cryptocurrencies are just not part of the “payment system”.
In an interview with Your Story, he said: “The payments system includes a lot of things like the settlement mechanism, and the banking system. In recent times, digital wallets and other payment mechanisms have been added to the entire scenario.
“What the Finance Minister might be saying is that cryptocurrency is not considered to be a part of these payment systems.
“Similarly, gold is not part of a payment system, but people still barter assets like gold for goods, as long as both parties record the transaction. It is an asset barter transaction.
“There is a little subjectivity on the matter. Can an individual swap cryptocurrency for another cryptocurrency?
“We have to wait for clarification on what the Finance Minister meant when he mentioned payment system.”
Bitcoin price chart
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Miles Eakers, chief market analyst at Centtrip, is now expecting more pressure on the token to result in prices falling down to $8,000.
He said: “Driven by talks about likely increased regulation, Bitcoin’s woeful start to 2018 continued today. Bitcoin has again fallen below $10,000 a coin, far from its record price of $19,891.
“The drop followed comments made by India’s Minister of Finance, Arun Jaitley, that the Indian government ‘does not consider cryptocurrencies legal tender or coin and will take all measures to eliminate use of these crypto-assets in financing illegitimate activities or as part of the payment system’.
“We anticipate there will be more of such protectionist regulation. This is likely to put Bitcoin under more strain, causing it to drop to the $8000 a coin level.”
The news comes after the South Korean Government insisted that it would not be banning cryptocurrencies like bitcoin, Ripple and Ethereum, instead suggesting that they will be more heavily regulated.
But Oliver von Landsberg-Sadie, founder of cryptocurrency exchange BitcoinBro, has argued that bitcoin is currently just experiencing “growing pains” and actually welcomes further regulation in South Korea.
I think we’re seeing growing pains Oliver von Landsberg-Sadie of BitcoinBro
Speaking to Bloomberg, he said: “I think we’re seeing growing pains.
“You referred to regulatory setbacks but I think these are regulatory steps forward.
“South Korea’s stance on making sure that the exchanges know who they’re dealing with is a very positive step. But it did have a hit on bitcoin.”
In another blow for bitcoin, social media giant Facebook will soon ban adverts that promote cryptocurrencies.
Rob Leathern, Facebook’s product management director: “We want people to continue to discover and learn about new products and services through Facebook ads without fear of scams or deception.
“That said, there are many companies who are advertising binary options, ICOs and cryptocurrencies that are not currently operating in good faith.”
He added: “This policy is part of an ongoing effort to improve the integrity and security of our ads, and to make it harder for scammers to profit from a presence on Facebook.”
Bitcoin, Ripple and all other major cryptos are also suffering from a recent barage of negative public opinion, an expert has warned.