The cryptocurrency market is facing its gravest crisis ever. Bitcoin has dropped to a level of around $6,000 from a peak of $20,000 about a month ago and there’re no signs of any surge as of now. In fact, over the course of last 3 days the value of Bitcoin has only tanked, thus pulling down the values of other ‘altcoins’ as well.
But why is it happening all of a sudden? What has gone wrong so swiftly that things are getting out of control? Well, the answer is a very serious (and concerning) one.
Global censorship: The key reason behind fall of Bitcoin
The main reason behind fall of Bitcoin is that governments around the globe have now set their eyes on it, and they’re coming after people who invest in Bitcoin and other cryptocurrencies. From Korea to UK to China to India there’re many big governments who in the recent days have signaled that they’re not going to allow the free run of Bitcoin anymore. Some of their actions include:
- China: The Chinese government recently decided to completely ban the cryptocurrency trading in country. The websites of foreign crypto exchanges have been added to country’s Great Firewall. This kind of crackdown coming from China is a very critical thing because the country is home to a large number of Bitcoin mining nodes (which are essential not only for increasing the value of currency from a steady pace but also for the basic functionality of entire Bitcoin network).
- South Korea: A few days ago South Korea also imposed its new rules related to Bitcoin and cryptocurrencies, which restrict the foreign investors from accessing Korean crypto markets and require Korean citizens to use their real identities to trade or invest in Bitcoin. While this country made it clear that it wasn’t blocking cryptocurrency trading entirely, the damage was done by then.
- India: Another major market of Bitcoin, India has also had a confusing stance about Bitcoin. While the country has not banned Bitcoin, its finance ministry and central bank have issued several advisories against the trading and investing in cryptocurrencies. In most recent developments, major Indian banks (which are owned by the government) blocked accounts of cryptocurrency exchanges and wallet companies in the country and Finance Minister Arun Jaitley also called cryptocurrencies “illegal” in his budget speech. The tax officials of country have already been cracking down on people who have invested in Bitcoin.
- United Kingdom: Another major source of ammunition behind fall of Bitcoin was from UK. Lloyds bank, which is one of the 4 biggest clearing banks in the world, banned the purchase of Bitcoins through its credit cards. The reason behind this move is fear of loan default. If Bitcoin’s prices continue to nosedive for a few more days, people who’re borrowing money from the bank to purchase Bitcoins won’t be able to repay their debts, thus pushing it into a financial crisis. Therefore, Lloyds Bank decided to be proactive rather than reacting to a tragedy.
In a nutshell, the global censorship from governments and financial institutions has led to this recent crash of Bitcoin. It remains to be seen how deep this crisis will be and the level to which Bitcoin will fall, but if governments continue to do their thing as they’re doing right now, the bloodbath is likely to continue in the coming days as well.