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This blog post is about the current price decline of the Bitcoin and why it will not recover on the short- and middle-term. The main reason is the diminishing number of Bitcoin users. This blog post contains a list of reasons and in the second part a technical analysis.
How Bitcoin users deal with the ruinous price decline.
No, I do not want to spread panic. I just list facts that should let us rethink on how we look at Bitcoin. The overall picture of the Bitcoin is dim and dull. Investors should not ignore the negative facts and news that lead to the current price drop and may even prevent Bitcoin from recovering from the low price levels it will fall to within the coming weeks.
While it is true that the value of a cryptocurrency with a fixed number of maximum coins will increase on the long term when more people use it, we have to check if on short- and middle-term, the number of Bitcoin users might drop and therefore the Bitcoin’s value has to decrease.
There are currently many bad news supporting the ongoing price decline of Bitcoin.
- News from South Korea about banning cryptocurrency trading in the future.
- News from China about banning cryptocurrency mining and verification.
- Right now, China hosts 80% of the computer capacity for the Bitcoin -8.57% Will operation of the Bitcoin -8.57% come to a temporarily halt? Will investors lose Bitcoins? What about the mining contracts? How long will it take to replace this huge computer capacity?
- Because of the newly implemented high transaction fees, will Bitcoin -8.57% survive as a payment coin?
- Bitcoin payment transactions have become very slow and are no more applicable on checkouts of big retail chains. Bitcoin users will face a long wait until they can use Bitcoins when shopping.
- The transaction fees are far too high for using Bitcoin for micro payments and micro donations anymore.
- Will a coin that can no more keep its promises remain the number one coin in the world?
- According to Egypt’s top imam, Bitcoin is forbidden in Islamic countries. Sheikh Shawki Allam, the Grand Mufti, issued a formal fatwa on Monday stating that trading in the digital currency is “forbidden in Sharia, as it causes harm to individuals, groups and institutions.” Allam likened the trading of the cryptocurrency to gambling, which he said is also forbidden under Islam. http://www.newsweek.com/bitcoin-top-imam-declares-cryptocurrency-forbidden-islam-and-calls-ban-768075
- In Bangladesh, Bolivia, Ecuador, Nepal and Kyrgyzstan, Bitcoin was already banned before.
The price of Bitcoin will gonnga crash again
The video from the year 2015 is still very actual.
Additionally, Bitcoin is connected to many criminal affairs. Here are just a few examples:
How will criminal affairs affect the price of Bitcoin?
First of all, we will see what impact the retreat of criminal users from using Bitcoin will have on the number of users and the price of the Bitcoin. All the cases with Bitcoin involved proved to criminals that Bitcoin is not an anonymous and safe payment method for criminals and gangsters. There is some necessity for regulations on cryptocurrencies and some countries are starting to create new rules.
News from USA that they will sell seized Bitcoins -8.57% worth over 300 million US-Dollars and news from Bulgaria that they will sell seized Bitcoins -8.57% worth 3.5 billion US-Dollars will put immense pressure on the price of the Bitcoin. May be they accelerate these sales as they lose a lot of money on the price decline of Bitcoin.
Will investors turn away from Bitcoin?
Many investors who lose a lot of money right now because of this current drop of the Bitcoin’s price will stay away from cryptocurrencies at all and many others will change to another, more future-oriented coin. What counts are fast transactions and low transaction fees. There are alternative coins offering much better payment solutions than Bitcoin does. On January 31, 2018, the Futurocoin will be launched. They promise transactions faster than 4 seconds.
More and more countries do no more allow to trade with cryptocurrencies
Taking into account the masses of Bitcoin users who are newly forbidden to own cryptocurrencies, we can understand why cryptocurrencies may lose some of these users, resulting in a price decline at least on the short-term and middle-term.
On the main chart above, there is a triangle with a downside outbreak. The low on January 17, 2018 was as low as USD 9005.
On the above zoomed, magnified chart, we can see that consolidation phase. The price of Bitcoin is currently in a consolidation phase. As the red dashed line at 12787 was not yet tested from the downside, I expect a pullback to that red line. Above the red dashed line, a promising bullish scenario is waiting. Will the market price of Bitcoin reach again this bullish paradise of riches and wealth?
Alternatively, is the red resistance line too strong and cannot be broken? As long as the market price of Bitcoin remains below that important red dashed line, the bearish scenario remains active and the target is 5568.
Most traders are far too optimistic and buy Bitcoins on the current would-be low prices. However, as it is likely that the price of Bitcoin falls down to 5568, selling one’s own Bitcoins and reducing the risk of a huge loss would be the safer approach.
You might also like this article about the Bitcoin massacre.
Currently, I have no Bitcoins in my wallets. I do some risky swing trading with low amounts.
This article is a personal opinion and it is NOT a trading recommendation. I may change my opinion without making an announcement. You do all your trades on your own risk.