The Price of Bitcoin Plummets As Digital Currencies Go In the Red

Bitcoin

The price of bitcoin is continuing to drop.

At the time of publishing, the digital currency was trading at $2,330, according to CoinDesk’s Bitcoin Price Index (BPI) on 15 June; however, the day had a low price trading at $2,296, pushing its market value down to under $40 billion. This marks the lowest price for bitcoin since the BPI observed it on the 4 June, when average prices across digital currency exchanges were recorded at $2,494.

Bitcoin’s latest trading price has dropped nearly 20 percent from when it recorded an all-time high recently on the 11 June at $3,041.

However, it wasn’t all doom and gloom just for bitcoin that saw its price slipping into the red. So too did ethereum. Previously, the altcoin had recorded a price of over $400, but the currency’s price has slipped down to $344. Despite this, though, its market cap value is steadily creeping up to bitcoin’s and is currently valued at under $30 billion.

According to CoinMarketCap, the top 20 digital currencies are all in the red with trading down by an average of 12 percent.

This news doesn’t bode well for the crypto market, which, up until now, has had a positive year for growth.

Cyberattacks Target Bitcoin

During bitcoin’s early existence it has had plenty of ups and downs, but 2017 has proven to be a great year for the currency. As a result, some may have believed that due to a price increase and the influx of investors trading in it, it had finally shed its volatility status.

That, unfortunately, doesn’t appear to be the case.

After bitcoin reached the $3,000 mark, it then dropped to around $2,500 in one hour before recovering to $2,700. This may have been the result of Coinbase who experienced a major outage on the 12 June due to an increase in consumer traffic.

Naturally, those who want to buy bitcoins at low prices were unable to do so, which sparked outrage on social media against the digital currency exchange. Not only that, but such an outage at Coinbase had taken place three weeks earlier too, with many people questioning if the company can keep up with demand as bitcoin continues to grow.

Other factors that could also be playing a role in the price of bitcoin are cyberattacks. It was recently reported that several cyberattacks on digital currency exchanges were taking place as investor interest overwhelms them.

On Monday, cryptocurrency exchange BTC-e reported that it had been hit by a distributed denial of service (DDoS) attack, which halted its services.

While Bitfinex, the biggest U.S. dollar-based digital exchange, announced that it too had come under a DDoS attack on 14 June. However, it stated that ‘most users will be able to use the platform normally though.’

Speaking to CNBC, Chris Burniske, blockchain products lead at ARK Investments, said that the cyberattacks were ‘not surprising‘ considering the price increase in the market.

“There’s a big difference between a denial of service attack, and a hack that causes clients to lose funds. As of yet, we’re fortunately not seeing any of the latter.”

And yet, according to Benjamin Roberts, co-founder and CEO of Citizen Hex, a digital currency trading startup, these attacks could give those behind them the power to change the market. With prices pushed down, criminals then have the opportunity to take advantage by purchasing digital currencies at a lower rate.

One Solution: Bitcoin Needs More Oversight

That’s according to Australian opposition Labour Party leader Bill Shorten who wants something to be done about the digital currency in order to tackle terrorism and cybercriminals.

In a speech that was first reported by The Register, Shorten suggested that regulations on bitcoin should be tightened, as ‘we simply do not know enough about to deal with properly.’ By doing so, agencies would have the necessary information to tackle this issue.

He said:

“Terrorists are increasingly using this network to avoid detection, conduct planning and acquire capability and tools to carry out their evil actions. We must target this threat head on. As terrorists adapt their methods and seek to hide online, we must ensure our agencies have the tools, resources and technology so terrorism has no place to hide. Likewise, we need to track and target terrorists as they seek to hide and obscure their financial dealings through electronic currencies like bitcoin.”

These are the latest comments from a country that is increasingly turning its attention toward the crypto world and the technology behind it.

In May, the Australian’s latest budget revealed that it was removing the double taxation on digital currencies, effective in July, making it easier for cryptocurrency exchanges to operate in Australia.

It states:

“From 1 July 2017, purchases of digital currency will no longer be subject to the GST (Government State Tax), allowing digital currencies to be treated just like money for GST purposes. Currently, consumers who use digital currencies can effectively bear GST twice: once on the purchase of the digital currency and once again on its use in exchange for other goods and services subject to the GST.”

Earlier in June, Melbourne-based Blockchain Global Limited (BGL) used bitcoin in a multi-million dollar investment to purchase a 40 percent stake in Australia Stock Exchange (ASX) listed DigitalX, a blockchain payments financial technology firm. This makes it the first-even bitcoin investment, which was announced on the ASX website.

In the same month, the Australian government’s research agency released two reports on the blockchain technology, which was conducted by Data61. Such a move suggests the country’s more proactive approach to understanding the technology further as it gets implemented in more use cases.

How Low Can Bitcoin Go?

How much further the price of bitcoin will drop remains to be seen. At present, things are not looking for for it, but it has rallied in the past before, so it could rally again.

As with record highs, it seems that a drop in bitcoin’s price is expected as it undergoes a price correction, but rising up again to produce a new all-time record high.

All we can do is wait and see what will happen next.

Featured image from Flickr via Christoph Haberthuer.