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What led to the recent drop in Bitcoin’s price? Some unresolved issues may have been at play
Aside the Bitfinex hack which is explicable, every time there is a drop in the price of Bitcoin - as we have seen in recent days - several unfounded factors tend to crop up to provide plausible cause.
This article was written to look at issues that affect Bitcoin price and yet defy a collective reasoning of consensus among many users. A case in focus is between Friday July 29 and August 1 when the price dipped by more than $50 from $655 to $603.
What was responsible for that?
There is a view that the current price is a reflection of the proposed regulation being considered for introduction by the EU. The idea is to collect, process and record personal data, and sometimes to share such data of Bitcoin and other cryptocurrencies users with relevant authorities. Anonymity has really worked for Bitcoin providing necessary freedom for users. This view supports the fact that the fear of the regulation being passed had a grip on the market.
One issue raised is the closed door meeting between Bitcoin miners and Bitcoin Core developers. Though its summary has not been released, there are suggestions that the Bitcoin Core did not uphold its alleged agreement with Chinese miners on scaling which resulted in a loss in confidence.
According to Coin Dance Bitcoin Community Opinion Poll Summary, more than 82% of respondents to the question ‘Do you think the Bitcoin network should hard fork to increase the block size limit?’ say ‘yes’ while over 17% say ‘no’. While this poll could not be verifiably considered to be an accurate representation of the community, the wide margin could hint at a growing disparity.
It may be surprising that the dip has been linked to the reality of the halving effect now setting in. There is a view that Bitcoin mining has become less profitable for small operations, especially since the halving on July 9, hence its effect is being felt now.
Another says the price of Bitcoin went up because of the halvening hype and it’s just readjusting to what should be its normal state. It is also said that since Bitcoin did not shoot to the moon as expected after the halving, but moved up a bit based on speculation, the readjustment in the price created some panic.
There are insinuations that people are using their BTC to buy ETC which is the most attractive digital currency currently in terms of 24-hour trading volume. Some think the shift to the newly-split, especially for its price rise around the days under review, is not just a coincidence.
Still in the market force context, there is another view that there is no right answer to the cause of the dip because no one has it. A better explanation is that it is a breakout from a long range of tightening in which the market chose to go down - at least - for now.
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