Bitcoin has suffered a significant setback after plunging in value by thousands of dollars to take the cryptocurrency’s price to below $10,000. The losses mean bitcoin has shed more than a quarter of its value over the last seven days. Dr Iwa Salami from The University of East London commented on the issue.
Sputnik: What are the causes of this [recent Bitcoin] crash?
Dr Salami: Firstly it’s been the statements recently of President Trump and also his treasury secretary Steve McNaughton, around the problems with Bitcoin and particularly linking Bitcoin with criminal activity and describing it as a purely speculative asset as well as not particularly promoting it as a crypto asset in itself.
So that obviously hasn’t gone down very well. I think much more than anything else is the technical indicators as well. Their predictions around the value of Bitcoin dropping around the time that we actually saw the currency begin to dip.
Primarily, the one middle indicator here being what is known as the moving average confirm competency divergence, which basically is an indicator that has been used to identify trends and changes around cryptocurrencies, and basically predicted that there was going to be a fall in the price of bitcoin around this time.
Because the previous predictions have actually been accurate or reliable, it’s believed that investors kind of felt that this would be an indicator to actually take on board. So those are two major issues around why the price of bitcoin has dropped.
Sputnik: With Facebook’s new cryptocurrency, Libra, being released soon; is this the end of Bitcoin?
Dr Salami: It depends on the perspective that you’re looking at it from. Some believe that the introduction of Libra would certainly be one that then makes cryptocurrencies much more valuable.
Since other cryptocurrencies that have come up as a result of the creation of Bitcoin have basically been introduced at the back of that whole engineers idea around Bitcoin and therefore, the argument really is around the fact that the introduction of currency such as Libra should if anything make the other cryptocurrencies or the original cryptocurrencies such as Bitcoin, much more valuable and spike the price of bitcoin.
That’s the reason why the price of bitcoin and other cryptocurrencies went up in the aftermath of the announcement of Libra in through the white paper released by Facebook.
Sputnik: This isn’t the first major crash we’ve seen for the cryptocurrency. Can Bitcoin regain its value in upcoming weeks?
Dr Salami: Bitcoin has had a history of very sporadic and wild fluctuations since its inception and this just speaks to the heart of the drawbacks defining itself as a career.
It’s hugely speculative as an asset, the criticisms around it not being tied to anything but tied to the whims of how investors are feeling or whether they’re prepared to take risk; we don’t have anything that we can measure the prospect of Bitcoin by and for that reason that’s we say it’s a purely speculative asset, the nature and its history has been characterised by wild fluctuations.
If we have another competitive cryptocurrency coming out that may boost the value or undermine the value depending on investors are feeling depending on how the market views this. I think as I said earlier, looking at and technical indicators that provide a history around the trends and changes of coins and cryptocurrencies such as Bitcoin might be the only way for investors going forwards with cryptocurrencies.
Views and opinions, expressed in the article are those of Dr Iwa Salami and do not necessarily reflect those of Sputnik.