2018 has not been a good year for Bitcoin and cryptocurrencies. Bitcoin rallied hard across 2017, hitting a peak of just below $20,000; however, this year has been far more challenging for the original cryptocurrency which dived to a low of $6000 in February.
Concerns over regulation, security and legitimacy have plagued Bitcoin since the start and resurfaced with vigour at the start of this year. As a result, investors sold out and have been nervous about reentering into the Bitcoin trade.
Bitcoin was, and to a degree still is famously unregulated. Regulators across the globe had been unsure how to address cryptocurrencies fearing that they are wide open to fraud and use by criminals. At the end of last year, China clamped down on initial coin offerings (ICO’s). Earlier this year China banned access to all foreign and domestic cryptocurrency exchanges and foreign ico websites as it attempted to eliminate cryptocurrency trading altogether.
China was not alone in its crack down on Bitcoin and cyber currencies. South Korea also took steps to ban ICO’s and passed laws to prevent deposits of cryptocurrencies into anonymous bank accounts. With each new step being taken by different country regulators or officials, Bitcoin lost value as investors became nervous that increased regulation signalled the beginning of the end for crypto currencies.
Threat from hackers has been an underlying fear of Bitcoin traders from the outset. At the start of 2018, an exchange in Japan was the target of a hack which saw $530 million worth of Bitcoin alternative NEM stolen from Japanese exchange Coincheck.
This is the largest theft to date of cryptocurrency; larger than the infamous Mt Gox hack back in 2014. As a result, Japanese authorities have clamped down on regulation over cryptocurrency exchanges and trading. 5 exchanges have since been closed. This incidence weighed on sentiment dragging Bitcoin lower still.
The banning of ICO’s by the tech giants was another blow to Bitcoin which saw the price drop. Starting with Facebook, Google and then Twitter, tech giants banning all ICO advertising has done damage to Bitcoin’s reputation as well as removing a useful advertising tool.
A combination of the above events sent Bitcoin from $13,000 at the beginning of the year to $6485 in April. However, things could be turning around. Across April, Bitcoin rallied 33% in its best month so far this year.
Whilst on the face of it increased regulation has negatively impacted on the price of Bitcoin, it could ironically also be the factor which lifts Bitcoin higher. Increased regulation could help Bitcoin go mainstream which would lift the price.
Vantage FX offers its clients the opportunity to trade Bitcoin and other cryptocurrencies through their account using either a Vantage FX platform or through MT4. You can trade small contract sizes and also have access to emerging cryptocurrencies.