The digital currency market is continuing its price correction journey and doesn’t appear to be slowing down any time soon as bitcoin hit a 49-day low on the 15th July when its value fell below $2,000.
For the first time in weeks the digital currency market value dropped to $66 billion over the weekend; however, it made a slight recovery bumping back up to around $72 billion at the start of the new working week on the 17th July.
This, though, is a significant drop from the market value June high when a total value of $115 billion was recorded. Bitcoin, too, is seeing a decrease in price. At the end of last week it was trading a $1,900. Yet, while its price has moved back up to $2,072, at the time of publishing, it has wiped a massive chuck off its market value and is currently worth just over $34 billion.
Many have speculated that this drop in price value could be down to the looming 1st August deadline when the bitcoin network could see an upgrade activated that is designed to fix its scaling issues. Those unsure as to what will happen may be weary of the outcome and be keen to sell their coins now.
Speaking to CoinDesk, Andrea Medri, founder of cryptocurrency exchange The Rock Trading, said:
“It could be people who are not comfortable in holding bitcoin because of August 1st due date.”
It’s believed that by the beginning of August, the community will see the activation for Segregated Witness (SegWit) through the User-Activated Soft Fork (UASF) also known as SegWit2x.
Even though 80 percent of Chinese miners are in support of SegWit2x, if the majority of developers don’t agree on the solution come the deadline, bitcoin could be split in two.
According to a blog on Coinbase’s GDAX exchange, Adam White, GM at GDAX, said that if a split were to happen:
“…we will temporarily suspend the deposit and withdrawal of bitcoin on GDAX and may pause the trading of bitcoin as well. This decision will be based on our assessment of the technical risks posed by the fork, such as replay attacks and other factors that could create network instability.”
Others, though, don’t think the scaling debate has anything to do with the price drop in the digital currency market and that there is nothing to worry about.
Taking to Twitter, Andreas Antonopoulos, author of “Mastering Bitcoin” and a teaching fellow for the masters in digital currencies program at the University of Nicosia, said that the price correction was due to rapid appreciation of the digital currencies in a short period of time.
“The *reason* bitcoin price is dropping is the rapid 1500% rise in 2 years, esp. the last 3 mo. The “scaling debate” is just a trigger. Relax.”
The value of bitcoin reached its highest point on 11th June when it soared past $3,000 for the first time. However, since then it is been experiencing a slow decline along with its fellow digital currencies too in what many believe is a price correction.
Ethereum’s Price Drop
It’s not just bitcoin that is seeing a decrease in its value, so too is the second most popular digital currency, ethereum.
On the 16th July, ethereum is reported to have dropped 22 percent in value from Saturday night’s prices to $159 and around 60 percent from a record $420, which is obtained on 12th June. Despite this price drop in its value, ethereum is still up by about 1,800 percent year-to-date.
While there is no apparent reason for the drop in value, CNBC cites digital currency experts placing the cause on two reasons: the possible bitcoin split and the number of blockchain startups selling their ethereum that they have raised over the last couple of weeks through initial coin offerings (ICOs).
According to a report from financial research firm Autonomous NEXT, in the first half of 2017 over $1.2 billion has been raised through ICOs while around $600 million has been raised in the last 30 days alone.
Interestingly, amid the ups and downs within the digital currency market, some think that the only way for it to progress to greater things is through regulation.
Last week, Bobby Lee, CEO of bitcoin and litecoin exchange BTCC, said the digital currency market needs regulation as more people buy into them or it runs the risk of getting out of control.
“I think regulation is much needed for this new asset class because otherwise it’ll run amok from society. But the challenge is how to craft the rules around this new technology.”
Whereas major financial services provider Barclays has been reported as talking with the U.K.’s Financial Conduct Authority (FCA) to discuss how digital currencies such as bitcoin can be made safe and brought ‘into play.’
This is certainly an interesting time for the digital currency market and it will be a time that will be watched intently over the next couple of weeks. It remains to be seen how much further the price of the market will drop and what impact the bitcoin network upgrade will produce when the time comes.
What is clear is that something needs to be done. The discussion of bitcoin’s scaling issues has been going on for some time, but it has reached a point now that it can’t go any further without a solution being agreed on.
And yet, while the digital currency is experiencing a downfall at the moment, speculators still believe in its future and have predicted great things for it.
A Wall Street strategist has been reported as saying that bitcoin could reach $55,000 by 2020 while a Saxo Bank analyst has come out and said that the digital currency could be worth $100,000 in 10 years time. Of course, even though bitcoin still remains a popular and trusted form of currency among the people, Morgan Stanley have said that the acceptance of bitcoin among top merchants is declining.
Meanwhile in Japan the number of merchants accepting bitcoin as a form of payment is expected to reach 300,000 by the end of 2017 as the digital currency experiences a new influx of investors keen to trade in it.
Featured image from Flickr via Gordon Scott.