Bitcoin and other major cryptocurrencies worldwide underwent a huge downfall recently, with Bitcoin leading the way by losing ~20% of its current value.
Is it doomsday for Bitcoin? Or is it just some minor correction taking place? With an upsurge in price in the coming weeks, what is likely to happen?
First, we have to understand that the value of Bitcoin is solely dependent on the market’s demand. If the demand is great, then the value should be strengthening and moving upwards; and if the demand is weak, then we should see its price fall.
Yes, there were some scares a couple of weeks ago where we saw the price of Bitcoin fell from its peak of $2,890 USD per Bitcoin to $2,264 USD per Bitcoin, but there are five reasons why it happened:
Short-term speculation is unavoidable, but it can be suppressed when there’s a lot of investors here for the long run.
2. Demand Fluctuations
Like commodity, when demand is greater than supply – price will go up.
3. Herd Mentality
When price of Bitcoin comes crashing down, investors who are looking to keep their profit will start panic selling
4. Law of Large Numbers
With $100 billion of market capitalization and growing, it will be harder for cryptocurrency to suffer a major downfall
5. Potential Bitcoin Split Due To Software Update
The Bitcoin insiders’ community, miners and developers, have come around to the idea that the current Bitcoin system needs an update to scale better given its global adoption. The update process has been contentious, and without a central authority in charge, it has been a laborious process. There’s a big chance that Bitcoin will split into two types in the coming weeks.
What goes up must come down, and market correction such as the recent Bitcoin downfall can be explained as per above. Like any other investments, most people are caught by surprise by its sharp decrease in price; but when there was a vigorous increase in price – no one complained right?
As more and more people from all over the world are putting their money on cryptocurrencies, then why would we be worried? If things need to be changed before it gets even better, then we should see some correction before things start going smooth again.
Category: Team WhaTechCompany profile: Tech junkie by profession and passionate about anything from the digital world, movies, games and reading. He loves writing and hopes you enjoy his writing as much as he does. Eza, is also known as Don in the virtual world, but don’t him me wrong, he's not a mafia type he's really a nice chap and a devout family guy.