The Strategist

Bitcoin is losing value. Why?

11/20/2018 - 14:19

On Monday, the cost of the most famous cryptocurrency - Bitcoin - fell below the level of $ 5 thousand for the first time since October 2017. During the week, its rate fell by 20%. The “bearish” game is played on a negative news background, as well as a general decline in demand for cryptocurrencies. The closest support level for Bitcoin will be $ 4 thousand, market participants warn. In the future, it can drop to $ 2 thousand.

On Monday, Bitcoin rate dropped below $ 5,000 for the first time in 13 months. According to Reuters, during Monday’s bidding, the rate of the most well-known digital currency dropped to $ 4,944, the minimum value since October 12, 2017. The capitalization of the world's main virtual currency fell below $ 90 billion, and the total capitalization of the global cryptocurrency market was $ 178 billion. The confident decline in the Bitcoin rate continues for the sixth day in a row, and during this time it has fallen in price by more than 20%. The last such rapid fall occurred at the end of March, when it lost a quarter of its price in a week. A sharp decline in cryptocurrency quotes six months ago was triggered by the news about suspension of trading on one of the largest cryptocurrency exchanges due to a technical failure.

The current decline in Bitcoin rate started last Wednesday in anticipation of the hardforks scheduled for November 15 (introduction of a new protocol, resulting in a new cryptocurrency) Bitcoin Cash. As a result of the separation, two more cryptocurrencies appeared - Bitcoin ABC and Bitcoin SV. Bitcoin Cash itself, in turn, also appeared as a result of a hard fork from Bitcoin in August 2017 due to disagreements over the best way to scale digital currency. The main reason for the hardfork was controversy between developers of Bitcoin Cash, promoting two incompatible chains: Bitcoin ABC and Bitcoin SV. According to analysts, hardforks can destabilize the situation on the cryptocurrency market, because they lead to rivalry between supporters of one or another new branch of digital currency.

Reports of semiconductor giant Nvidia put additional pressure on Bitcoin quotes. The world's largest developer of graphics processors reported that the company's revenue grew by 21% compared to the same period in 2017, to $ 3.18 billion. At the same time, analysts expected an increase to $ 3.24 billion. One of the reasons for the unjustified expectations was a drop in sales of OEM and IP processors that are used for mining cryptocurrency. According to the company, sales fell by 23% to $ 148 million.