Bitcoin Value Tanks After U.S. Government Announcement

Martin Green

Monday, March 12, 2018 4:39 PM UTC

Monday, Mar. 12, 2018 4:39 PM UTC

Bitcoin plummeted by more than 20% in value during the past week amid fears of tighter regulations in the USA.

Bitcoin plummeted by more than 20% in value during the past week amid fears of tighter regulations in the USA. The Securities and Exchange Commission said online platforms trading digital assets that are considered securities need to register with the federal agency. It expressed its concerns about the rise of cryptocurrencies and said it will require digital asset exchanges to register with the agency in order to protect investors’ best interests. That sent the market into a panic, as investors feared regulatory clampdowns, and the price of Bitcoin tanked 10% within an hour of the announcement.

The fall from $10,673.03 on Wednesday to $8,775.01 on Friday illustrated just how brittle and volatile Bitcoin is in 2018. It has since rebounded somewhat and has climbed back above the $9,000 mark on Monday, but it shows that investors are spooked.

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Bitcoin is tanking again and just slumped through $US9,000 — via @BIAUS

— Business Insider (@businessinsider) March 9, 2018

The SEC said in a statement: “If a platform offers trading of digital assets that are securities and operates as an 'exchange,' as defined by the federal securities laws, then the platform must register with the SEC as a national securities exchange or be exempt from registration. The SEC staff has concerns that many online trading platforms appear to investors as SEC-registered and regulated marketplaces when they are not. Many platforms refer to themselves as ‘exchanges’, which can give the misimpression to investors that they are regulated or meet the regulatory standards of a national securities exchange.”

Business strategist Tom Lee, a Wall Street expert on Bitcoin, has devised a Bitcoin Misery Index to measure how happy or sad investors in the cryptocurrency are at any given time. He warns that the index is at its lowest levels since 2011, and he believes things will only get worse over the next couple of weeks as we are due a bombardment of negative news surrounding Bitcoin.

“Think of this as a way to measure how happy or sad you are owning Bitcoin. So it counts towards a win ratio and a volatility,” he said. “And this thing is telling us that Bitcoin holders are miserable. You know, it is currently at 19, its range between 0 and 100 and it is the lowest reading since August of 2011. Since 2009 [when it began] we’ve had roughly 50,000 days, only 34 of those days was the reading below 27 so it is really uncommon to be this miserable owning Bitcoin. I wouldn’t be surprised if investors wanted to get out of Bitcoin.”

However, in a more optimistic note Lee added that short-term pain has always been followed by long-term gain over the years. Futurologist Thomas Frey backed this up by predicting that cryptocurrencies will replace around 25% of fiat currencies like dollars and euros by 2030. He said they are simply more efficient, something many sports bettors can attest to. The anonymity, the ease of use and the way it cuts out the middle man are all huge positives for online sports wagering, you just have to guard against the volatility by constantly changing your winnings back into fiat currencies immediately.

There are no signs of this volatility slowing down. Over the past 10 days we have seen wild swings, and its value has regularly increased or decreased by more than $1,000 in a single day. Every time the market gets a whiff of regulation in various markets around the globe, you can expect the price be affected. The US, the UK and the EU have all signaled their intention to regulate cryptocurrencies and further revelations keep knocking its price. But in the long run it could be a positive, giving the new digital asset class the final push it needs to become mainstream.

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