Not long after Bitcoin’s all time high of $20,000, in 2017, its price tanked to just $6,000. To say it’s been a tough start to the year would be an understatement.
2018 has thus far not been the year for cryptocurrencies that 2017 was. Concerns over regulation, legitimacy and security have plagued it right from the start, and 2018 saw some of those fears ramped up, weighing heavily on sentiment for cryptocurrencies.
China had already banned ICOs in September 2017. Then on 5th February, the People’s Bank of China went a step further and blocked access to all domestic and foreign cryptocurrency exchanges and ICO websites, as it aimed to eliminate citizens trading in cryptocurrencies. China was not alone in taking measures to curb trading in Bitcoin.
Citing concerns over instability and potential use for criminal activity, governing officials in South Korea have banned ICOs and passed laws to prevent cryptocurrency deposits into anonymous bank accounts. Meanwhile, India’s government said that it would not recognise cyber cash as legal tender, signalling an outright ban on Bitcoin and other cryptocurrencies.
Government crack downs have not been the only challenge for cryptocurrencies and Bitcoin this year. Questions over security were once again at the forefront of traders’ minds following a hack at Japan-based exchange Coincheck, which saw it lose $530 million worth of Bitcoin alternative NEM to hackers, in the largest case of Bitcoin theft to date. Since the incident Japanese authorities have cracked down on security closing a further five exchanges, under mounting regulatory pressure.
Tech giants ban ICO ads
And the bad news doesn’t end there. Tech giants Google, Facebook and Twitter have all banned ICO advertising. The blanket ban has certainly done some damage to the market as it raises a question about legitimacy once again. Not only has it deprived the industry of a very useful tool, but it has also added to the current stigmatisation of cryptocurrencies.
If big tech stocks don’t want to be involved, then should the standard retail investor? A combination of these events has pulled Bitcoin from around $13,000 at the beginning of the year to just $6,485 in April. But is it really all bad news?
The regulatory crack down does have a silver lining. The more regulated that Bitcoin is, the more chance of it hitting the mainstream. That is when we will see the price really start to rise again. There needs to be good regulation in order for the large institutions to become properly involved and engaged. And who knows, under those circumstances the tech giants may also be prepared to take another look at their blanket ban.
But right now, although this may seem to be doing more damage than good, the fact that scammers will find it hard to advertise on platforms such as Facebook and Google could actually be a good thing for the industry, helping it in the long run. So, after all the bad press for Bitcoin, could its fortunes finally be changing? April has been its best month year to date, as it finally sits comfortably back over $9,000. This represents a 33% increase from the low of $6,490 on 1st April and the biggest rally this year.
In order to have confidence that this recent run has legs to run higher, we would want to see Bitcoin trade convincingly through $10,000. This is a big psychological level for traders and a few weeks above $10,000 could indicate that the worst is over for this cryptocurrency.
There are still many challenges ahead for Bitcoin and its rise out of the depths hit earlier this year could be slow. However, increased regulation, ironically what sent it lower, could also help the price of Bitcoin pick up. Predictions last year of $50,000 etc all seem well off the mark, but a sustained move over $10,000 could be on the cards.