Just the other day I wrote about bitcoins and why I didn’t invest in them. Bitcoin’s volatility this year has left many concerned as they begin to question its future. The dynamics of the cryptocurrency, that provide anonymity and decentralization have been exploited for illicit activities prompting action from governments all over the world to control it. Bitcoin’s speculative market shuddered as government regulation and fake news took effect.
Exaggerated and misinterpreted news stories have contributed to the recent dramatic fall in Bitcoin’s price. While it was inevitable that governments would have to crack down on Bitcoin, as it evades regulations and authorities, what has transpired is an escalation of events.
A South Korean minister, in January, announced the country’s intention to ban Bitcoin. The initial statement prompted a sharp drop in the price of Bitcoin, that has not been recuperated since. despite a rumored correction by higher authorities that stated there would be no ban.
An incident such as this demonstrated the threat posed by speculators who can manipulate the currency because of its decentralization. Some South Korean government officials have been accused of insider trading.
The crackdowns that are taking place will continue as governments decide how to regulate. However, this may not end Bitcoin, as the market decides its future. Bitcoin might have reached its heights or is simply going through another phase of discovery.
Anonymity and decentralization will always pose a threat to governments but it is currently being exaggerated as regulators take a tough stance. The IRS in the US has been tracking users since 2015. In addition, most exchanges perform identity checks.
Chinese authorities, however, are approaching Bitcoin regulation in a different way as they attempt to stop citizens from trading and mining. This is an exception as most countries will follow the regulatory rules implemented by the US and Japan to benefit their domestic markets.
Despite South Korea’s apprehension towards cryptocurrencies and more particularly Bitcoin, the government is also showing signs of being open to regulation rather than a complete ban.
Given the prominence of Bitcoin trading in China and South Korea, a straight out ban in these two countries could prompt another selloff, which the virtual currency would be unable to recover from. However, I think we are still a way off from that point yet.
Bitcoin trades 24 hours a day, 7 days a week, and it extremely volatile. It is this volatility is that is capturing the imagination of traders. At the end of last year during its extraordinary rise to almost $20,000, traders and the media alike were captivated.
On the way down, in early 2018, the same has happened. This is because speculative traders of Bitcoin can still make money when Bitcoin declines in value, through shorting.
It is possible to short Bitcoin through a broker such as Vantage FX. They are a forex broker who is based in Australia and are regulated by the Australian Investment and Securities Commission.
They provide their clients the opportunity to trade Bitcoin on the world-renowned MT4 platform.