Three weeks into 2018 and there seems to be that something is still struggling with a New Year’s Eve hangover. After having an incredible 2017, Where it seemed it could do no wrong, Bitcoin and its fellow cryptocurrencies have had to swallow a dose of reality that whatever goes up must at some point come down. Over the last few weeks Bitcoin has fallen by nearly 40%. Baring in mind that around the end of December is set to break through the $20,000 level and now at the time of writing it is trading around $10940 per coin, this is all quite a turn around.
Now as any bitcoin trader will tell you, volatility is a not new for bitcoin and that it is deeply rooted into its dna, but following the success it experienced in 2017 there are now murmurs circling around the market that the bubble has finally burst.
So what is the main driving factor behind this sell off. Some analysts have commented that the this sell off is being caused by speculators trading the option market who are only looking for short-term opportunities as opposed to the long term holders of bitcoin. But I think the general consensus of what is causing this rout is the fear that regulation of the cryptocurrency market is finally on its way.
On the 11th January South Korea announced that it was considering to ban cryptocurrencies like bitcoin from being traded outright on its exchanges.
But didn’t we receive similar threats from China and Russia last year which didn’t stop the rally? Why is South Korea so important? The fact of the matter South Korea only comes behind Japan and the United States as one of the biggest markets for bitcoin trades. But due to stories circulating in South Korean media of everyday housewives and even school children clambering to buy this digital currency, the South Korean government is clearly getting concerned about this apparent “madness of crowds”.
But will they actually go through with their threat of banning bitcoin?
With bitcoins amazing run in 2017 having engulfed the imagination of South Korea’s populous, the younger generation being tech-savvy have fallen in love with cryptocurrencies who dream of making their fortune by trading it. With so much admiration for bitcoin and its brothers you can expect some resistance if the South Korean government proceeds with attempting outlaw it. As it stands, more than 200,000 people have signed a petition on the official website of President Moon Jae-in demanding that bitcoin trading remains in existence. With the pledge by the Government to answer such petitions within a 30-day period you can expect that banning bitcoin will not at all be an easy and straight forward task.
At the end of the day, unlike China who have come down hard on bitcoin trading. South Korea have a democratic government, which means the power of the people may prevent any threat from becoming a reality.