The crash of bitcoin fuels the fear of the bursting of the cryptocurrency bubble | Economy


The bitcoin is back in the pillory. The digital currency that astonished the world with a brilliant ascent last year - when it went from a price below $ 400 to close to $ 19,000 - has long been a source of displeasure to those who invested in it. If there is no surprise, 2019 will go to the cryptohistory as the year that put an insurmountable ceiling on digital currencies. Bitcoin now loses 80% from the maximum reached in December 2017, according to the Coindesk page.

When will the bitcoin bubble burst? It's a question that analysts have been trying to answer for months. Well, if the bubble has not exploded in recent weeks, what happened is very similar. Experts cited by Bloomberg believe, in addition, that this downward trend will continue soon. "Bitcoin is no longer boring," said analysts Bloomberg Intelligence last week, who anticipate that the price of the currency could fall to $ 1,500.

The value is adjusted to the regulation

Juan Pedro Gravel, partner of Technological Strategy of Deloitte, sees "more than possible" that we attend a process of greater regulation of cryptocurrency, and that both the number and the value of these "begin to adjust to the traditional methods of valuation of assets".

"Technological and financial innovation sometimes generate irrational expectations. In cryptocurrencies, the hype technology with the speculative bubble. The excess liquidity in the market was combined with an attractive technology to generate, in the case of bitcoin, a very attractive overvaluation of the asset, with values ​​close to $ 20,000, "explains Gravel. The partner of Deloitte adds that these processes always end in an important correction that, in the case of bitcoin, has occurred "with unusual violence".

Bitcoin quote
Bitcoin quote

The bitcoin fell a week below $ 4,000, a barrier that had not crossed since September last year. Since then, this cryptocurrency of enormous volatility has lived days of euphoria, like the past day 28, when it experienced the biggest daily rise in months. But the sharp increases were followed by equally virulent drops, leaving the value of the digital currency on Friday at around 4,000 dollars.

Regulatory pressure

The explanations for these ups and downs vary from one analyst to another, but many agree on some factors that pull down: the disagreements in the community of developers of this currency created in 2008 by one or more people with pseudonym Satoshi Nakamoto; the growing pressure from regulatory bodies and the doubts surrounding their ability to become a common means of payment.

The great volatility of the virtual currency

What is bitcoin? Bitcoin is a fully digital currency based on transactions. It was born as a payment system for the Internet, and unlike other currencies, it is not subject to an authority or intermediaries. Some companies and services accept payments with it. Its value depends on the confidence of the users and the demand.

Maximum price. The bitcoin reached its highest value last year, when it reached almost 18,700 dollars at the end of 2017. However, as it rose, it fell again. Two months later, it was worth less than $ 7,000.

The worst moment. Bitcoin has lost 80% of its value in 2018 and is experiencing its worst moment this month, close to $ 4,000. Yesterday it even arrived in some moments of the session to lower of the 3,700 dollars.

The fall in the value of bitcoin can lead to a flight of investors who until recently saw in the digital currency a new gold mine. The collapse will also discourage part of the mining community, those who are responsible for creating powerful new computers with coins, an operation for which they spend huge amounts of electricity in exchange for remuneration.

A few weeks ago the disagreements in the cryptocurrency community led to a division -fork, in the jargon of the sector - bitcoin cash - which, in turn, had also been born in 2017 as a spin-off of bitcoin. This conflict has also been an incentive for the fall of value.

It is true that bitcoin has lost some 700,000 million dollars of capitalization in a few months. But it is too early to declare this cryptocurrency still dead. In previous falls, some have rushed to certify their coma. And, in all these occasions, they have ended up erring. Regardless of their value, more and more companies declare their interest in using blockchain, the technology on which bitcoin is based, for an infinity of utilities.

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