Top Four Reasons Why Bitcoin Could Crash Soon
Bitcoin has been an attractive investment and digital currency for the past year. In 2017 alone, investors saw significant increases in value as the price per coin increased from under $1,000 per coin at the start of the year before hitting a maximum amount of around $20,000 per coin in December 2017. This dramatic increase in value has created many Bitcoin millionaires and has some believing that the price per coin could one day hit $100,000 or higher. While many think that Bitcoin could increase in value in the future, there are four key reasons it could soon see a reversal and decline rapidly.
#1 Increased Regulations
One reason Bitcoin could see negative pressure in the coming year is due to increased regulation. 2017 saw a significant increase in control and more are expected to come in future years. In Asia, both China and South Korea instituted policies that make it illegal to start new ICOs, and other restrictions are forthcoming. I
n the United States, increasingly more regulations are being imposed on businesses that accept Bitcoin as payment. These trends may help to legitimize the currency, but could also take away the speculative momentum.
While digital currencies are bound to have an impact on the worldwide economy in the future, there is bound to be consolidation in the future that could result in just one or two winners. While Bitcoin is the largest and most reputable cryptocurrency today, it is far from being the only one. Both Ethereum and Litecoin have seen dramatic increases in value and could one day become the preferred digital currency across the world. If this happens, the Bitcoin price could crash.
#3 Institutional Investments
2017 was also a significant year for Bitcoin as it was the year in which institutional investors were able to purchase Bitcoin futures. While this has been an excellent sign for the digital currency, the institutional money today is only able to buy Bitcoin by placing a positive future bet. In the future, there is bound to be new exchanges and contracts established that will allow people to either purchase put options or short sell Bitcoin. If this occurs, there will be a dramatic shift in how money is placed into the digital currency. That could easily cause downward pressure and lead to a substantial decline in value.
One of the main reasons Bitcoin was appealing, in the beginning, was because it was tough to track. That made it ideal for people who wanted to hide money or keep transactions completely secret. However, Bitcoin is bound to receive more surveillance and scrutiny soon. Both the FBI and IRS have stated that they are focusing on Bitcoin transactions. This increased oversight could take away some benefit of using Bitcoin, which makes it less valuable as a currency.
Four Reasons Why Bitcoin Could Crash Soon Conclusion
Bitcoin has been a stimulating and intriguing investment for the past few years. While it has seen significant positive growth, there are four reasons it could see significant declines in the coming years.