We’d need a slide-whistle to give the sound-effect to go with a graphic of Bitcoin’s value over the last 24 hours. The news from China that one of the most popular exchanges in the country will stop trading Bitcoin by October has the world’s most popular cryptocurrency losing some of its recently gained ground.
The sky, however, is not falling (probably) — Bitcoin dropped from nearly $5,000 to almost $3,400 in the past week, and now it’s hovering at $3,500.
Yesterday TNW reported that a few hiccups, like condemnation from JP Morgan’s CEO and an outright ICO ban in China, were affecting Bitcoin’s ability to rally. Today’s news involving China’s crackdown on Bitcoin exchanges shouldn’t surprise anyone – in fact we’re likely to see further restrictions from the country by the end of the year.
The quick-take for today’s report is that you should sell Bitcoin if you’re feeling bearish and believe that a $3,000 settling point is a viable outcome. If you’re undaunted by the recent plummet — which is the largest since June 20 – there’s another option: buy more.
Bitcoin, like any other commodity, is subject to the normal rules of confidence and speculation. Jamie Dimon, CEO of JP Morgan, believes that Bitcoin will fail because, as he puts it, “it’s entirely based on speculation.”
One of the differences between Bitcoin and currency is that it costs $3,500 to make one right now, whereas it costs less than $0.01 to make a dollar bill. The only speculation is in market value – but there are people beyond investors using Bitcoin.
We can’t entirely blame China, as there’s more than one reason for the recent drop:
- China, of course, but the future is still uncertain. We’ll probably see more bans out of China before the month is through, and more still before the year is out. Those who remain bullish will have to learn to take further bumps from the East in stride.
- The near $5,000 record-high in August was bound to shake some early investors (and short-term ones without nerve) from the Bitcoin tree. CoinDesk concludes that this is part of an expected correction after the big surge.
- Bitcoin has a higher entry price than any other coin making it exponentially more susceptible to investor confidence shakeups.
Bitcoin is down 19% month-over-month, which might be cause for concern, if you’ve only recently invested and were planning on cashing out quickly. If that’s the case for you it might be worth holding on for another surge. When the Bitcoin blockchain forked people went running for the hills and caused a similar drop. Those people missed out on the chance to sell at an all-time high when it rallied back within days.
Over the course of this coming weekend most experts are predicting a few more dips in value, so it may be time to brace yourself against the onslaught and “HODL” (crypto-nerd speak for “hold”) out for another surge.
Call me crazy (@mrgreene1977 on Twitter, if you’d like to) but I still see $10,000 in Bitcoin’s future, despite China raining on the money-parade.
Full disclosure: I’m an optimist. You shouldn’t take financial advice from optimists (or anyone else) unless they are qualified financial advisers, which I’m not.