Why Is Bitcoin’s Price Dropping? 3 Potential Reasons
Bitcoin, one of the most popular forms of cryptocurrency, has taken quite a hit in value over the past week, and many people are wondering why that is. Is it just a market correction? Are there technical problems behind the scenes? Or are there deeper issues at play? Let’s take a closer look at what’s going on with bitcoin and its price to see if we can figure out what might be causing this recent drop.
1) Lack of trust in traditional financial institutions
There is a lack of trust in traditional financial institutions and the recent news that Goldman Sachs will not be trading bitcoin has led to a drop in the price. There are also technical issues with the network, such as how long it takes to mine new bitcoins and transaction fees.
Why Is Bitcoin’s Price Dropping? 3 Potential Reasons
The value of bitcoin changes based on supply and demand which is influenced by these factors. In addition, many people were buying up coins during the huge rally so they could sell them at a profit later, which created too much demand for limited supply and caused prices to skyrocket.
2) The Chinese government cracked down on cryptocurrency trading
The Chinese government has cracked down on cryptocurrency trading, which may be one of the reasons for bitcoin’s price dropping. China banned all initial coin offerings (ICOs), closed cryptocurrency exchanges, and prohibited all financial institutions from providing services to any individual or organization involved in ICOs or cryptocurrency trading.
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This could potentially disrupt the flow of money into bitcoin markets, which could lead to a drop in the price. It also might make it difficult for some people in China to buy bitcoin. A greater number of investors are selling than buying: Right now, there is a larger number of people selling their bitcoins than buying them, which is causing prices to go down.
Why Is Bitcoin’s Price Dropping? 3 Potential Reasons
There is uncertainty over how future regulation will play out: No one knows what will happen with regulations in the future, so it’s hard to predict what will happen next with prices.
3) Bitcoin hasn’t been adopted by mainstream businesses
In order to understand why the price of bitcoin has been dropping, it helps to look at the demand for bitcoin. One of the main reasons for its existence is to serve as a medium of exchange, a way to transfer money without the need for banks.
The problem is that bitcoin hasn’t been adopted by mainstream businesses like Visa or Mastercard. To combat this issue, there are potential solutions such as making it easier to buy bitcoins with government-issued currency and reducing transaction fees.
Why Is Bitcoin’s Price Dropping? 3 Potential Reasons
Yet these can only be temporary fixes because they don’t address the core issue: lack of merchants accepting bitcoins. It seems like as soon as someone announces that their business will start accepting bitcoin, people rush out to purchase coins in anticipation which drives up prices again before anyone actually does any shopping with them.
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