As Bitcoin Sinks In The West…

Whatever the merits of the blockchain (the underlying technology for digital “crypto-currencies”), the fact remains that crypto-currencies are not fiat money and they have no endorsement at a nation state level. Consequently, all are vulnerable to a whim of a major nation state which could outlaw them since they can (and have) been used for money laundering purposes and for transactions on the “dark web” alongside there legitimate, intended uses. There are also concerns that they could be used in market manipulation activities.

Bitcoin is the most famous and well-established crypto-currency and has seen its value rise from about $0.60 at launch (2010) to the astronomical level of $19343 in mid-December 2017. Since its zenith (there was a meteoric rise from $900 to the maximum over the course of 2017), Bitcoin has been shedding value. A look at the historic trading chart shows a typical decay curve in its value that currently shows four major price rallies this year with each peak falling below the previous maximum – it is sinking. This year has seen the Bitcoin tank from $13412 to stand at $6351, currently.

Part of the decline is due to the melting away of the hype about crypto-currencies (responsible for its huge rise), part has been due to hacks on digital banks which saw millions in nominal worth stolen and part is due to disquiet being expressed about them at state level.

The most recent (this week) slump in value has been linked to a decision by Goldman Sachs to shelve plans for a digital currency trading desk. The decision has been taken against a warning by the US Securities and Exchange Commission (SEC) that it might decide to treat initial coin offerings as securities. Were this to happen, trading in them would fall under US Federal law. It is likely that the potential change in the regulatory environment for Bitcoin will spark a further downward adjustment in the virtual currency. Since the start of the year, there has yet to be any sign of it hitting a plateau in value. The time chart of the currency has all the hallmarks of a speculative bubble that has well and truly burst and the only remaining question is how low it will fall before hitting some form of stability.