Bitcoin investors have already had a tough year – and the year is only half over. After reaching an all-time high above the $20,000 mark in December-January, Bitcoin prices plummeted in the first quarter to oscillate around the $6,500 mark. Several attempted breakouts have been all for naught as of July, and expert observers seem split as to the coin’s end-of-year price point.
We’re going to look at some of the lumps Bitcoin has taken thus far in 2018 – including organic market corrections, regulatory spats, and high-profile hacks – and attempt to anticipate the coin’s short-term future.
Corrections abound
Very few market observers predicted that Bitcoin’s $20,000 high-water mark would last for long. Conversely, very few market observers thought the coin’s price would fall so hard and so fast, bringing the bulk of the crypto market down with it. However, some observers have pointed out that Bitcoin’s seemingly exaggerated correction is actually well within its historical limits, and no one’s arguing that even Bitcoin’s 2018 lows are well above its average 2017 levels. Binance CEO Zhao Chengpeng said in a tweet that Bitcoin was following the same pattern year by year and referred to charts comparing Bitcoin’s price in 2017 versus 2018.
Regulations strengthen
Regulatory headwinds hit Bitcoin and other cryptocurrencies very early in the year. The U.S. government announced that the so-called like-kind loophole would not apply to cryptocurrencies, squashing the hopes of many day traders that their 2017 activity would be untaxable. The Indian government likewise said it would push cryptocurrencies out of the economy for payment purposes, although it will consider blockchain technology on the whole for streamlining government activities. South Korea appeared to be loosening its notoriously conservative view on cryptocurrencies before a series of high-profile hacks occurred, prompting calls for stricter regulation.
Hacks produce bad PR
Those hacks weren’t isolated incidents. Exchanges in South Korea, Japan, and elsewhere were hit in 2018 for millions of dollars. This not only damaged the exchanges and the already existing investors, it potentially scared away new investors and institutional money. It was sobering for the market to see millions – a half a billion, in the case of the Coincheck hack – simply evaporate in an all-digital heist.
Luckily, all these pressures appear to be temporary. The correction cycle, as noted by Chengpeng, is a yearly occurrence that seems to be slowly spiraling upward. Regulatory pressure may not be a bad thing in the long run, due to the increased clarity it gives investors and the bolstered security it provides institutional money handlers. And hacking is a fact of life in the digital age. The house holds the advantage in the arms race between hackers and security professionals – particularly with regulatory pressure looming.
Bitcoin price predictions are all over the map. John McAfee’s $1 million prediction still stands, alongside more conservative $25,000 figures. It’s impossible to tell. However, few market observers are predicting that prices will stay at or below their current level.
