The decentralized Crypto market was initiated in the year 2009. Ever since then the crypto market has been very fluctuating. The fluctuations can span up to thousands of dollars within just a few hours. The Bitcoin market is hence said to be volatile in nature due to the low market capitalization. The traditional stock market trades around trillions of dollars per day but the cryptocurrency market trades only a maximum of billion dollars per day.
The year 2018, is not proving to be very lenient for the cryptocurrencies as many of them are experiencing a bearish trend apart from a handful of them. Even for bitcoin, the market has been very bad with the current price around $6563 fallen to almost one-third of its all-time high of 2017 of about $19,511.
Immediately post its record high, it almost fell to half of the value due to the negative news by the US initiating a regulated feature for the cryptocurrencies. Following which the crypto space experienced a number of subsequent threats by the regulators of various countries like China, South Korea, including India.
The hack of the Japanese Exchange, Coincheck where it lost almost $500 million worth of Bitcoins. Followed by the cryptocurrency ad ban by the popular social media website Facebook. A few weeks after the theft at the cryptocurrency exchange, Coincheck the Japanese authorities raided their offices in order to confiscate their computers and documents as evidence.
The Bitcoin scalability issue is the most popular one and also the amount of electricity required for mining the Bitcoin is increasing at a rapid rate.
The asset manager’s head of global economics and strategy, Stefan Hofrichter is of the opinion that Bitcoin as an asset as well as a currency has very serious flaws which might be the precise reason for the Bitcoin bubble to burst. He continues to say that Bitcoin does not have any intrinsic value because it is not backed up by any form of asset and hence does not generate any income.
Hofrichter, from a perspective of an environmentalist working for a social cause, even added the fact that the cryptocurrency production requires a huge amount of electricity which is not viable.
However, like much other business analyst and experts, even Hofrichter agrees that the underlying Blockchain Technology has a lot more impact than the cryptocurrency Bitcoin.
Many experts even believe that though Bitcoin is presumed to replace Dollar and Euro in just a single day, the value if the cryptocurrency is not actually driven by any strategic worldviews but only by the belief that the crypto enthusiasts have in it.
According to them, all these factors are the signs that the Bitcoin bubble is about to burst. The burst may be triggered by any other hacking attempts or any serious regulations bought into the cryptocurrency market by the financial regulators throughout the world.
According to some of the financial experts at Capital Economics, even if the Bitcoin Bubble bursts and there is a complete breakdown of the cryptocurrency market, the actual financial market would not be affected that much, as the number of investments in the cryptocurrency space is relative less, due to the fact that many institutional investors have not invested in the cryptocurrencies yet.
They even pointed out at the other applications of the blockchain technology apart from the finance and banking sector. They made it very clear that even if the cryptocurrencies failed the blockchain technology will last because it has potential to find its application in various other domains such as in electoral process, Healthcare industry, supply chain management, and many more.
The Chief financial regulator of South Korea, where almost 15% percent of the daily transactions of the Bitcoin world takes place informed the MPs of Seoul that the government was planning to shut down all the virtual cryptocurrency exchanges. The thought was actually initiated by the Justice Minister of the country. Following which the Financial regulators of Russia, as well as the Chinese government, have hinted to follow the footsteps of South Korea.
All these incidents cumulatively added up to the reason for the fall of the Bitcoin market. Also, there are a number of inherent flaws that exist in the current Bitcoin blockchain network protocol.