In the last two weeks, the price of bitcoin has fallen 50% from the all-time high it recorded just a month ago. It is not – and probably will not be – the first time that the price of this cryptocurrency has plummeted in a matter of days. Some remember when in its initial phases, in 2013, it fell 86%. Still others do not forget the 83% drop it registered at the end of 2017, after reaching a record peak.
This time, the situation seems the same although some of the factors behind the crash are different, and could put bitcoin on a narrow and more volatile path, according to specialists and asset managers.
In the first half of April, the price of bitcoin hit record levels and accumulated a market value of $ 1 billion. One day powered by cryptocurrency influencer Elon Musk; another day despite what the Tesla boss wrote on Twitter. For the second half of the month, the bullish streak of bitcoin and other cryptocurrencies hit a wall. The price of bitcoin plummeted from $ 63,000 to below $ 40,000 in less than 15 days and lost a third of its market value. The decline was mainly due to financial authorities in China announcing that they would take “drastic” action by banning bitcoin trading and mining.
“This latest news should challenge the outlook, popular with crypto enthusiasts, that crypto and other decentralized financial applications can operate completely free from government reach,” the team at Swiss financial firm UBS commented in a report.
For Luis Gonzali, investment director at the asset manager Franklin Templeton in Mexico, this is just one example of the disadvantages that await this sector that accumulates a market value of 1.6 trillion dollars, according to the Coinmarketcap site. “We believe that going forward, regulators or governments will continue to try to regulate the market. They are going to be the ones who are pulling the active price ”, says Gonzali.
There are various attempts to cap cryptocurrencies. This same year, the government of India analyzes ways to regulate them, according to a report in the Indian newspaper The Economic Times. There are also other ways in which governments around the world begin to squeeze the market for these types of digital assets.
In the fiscal field, for example, the United States Department of the Treasury plans to take a slice of bitcoin and established that transactions worth more than $ 10,000 will have to be reported to the tax authority, it said in a statement.
Central banks, perhaps one of the institutions most interested in not losing the monopoly of money, are beginning to confront these decentralized assets and are already outlining digital currencies. The trend seems irreversible and these projects are seen in different countries: Sweden, the European Union, the United States, China, among others.
“This combination of competition from decentralized and centralized currencies and the regulatory issue is going to end up hitting the price of cryptocurrencies that we have today quite hard,” says Gonzali.
