We are talking about those who have already invested in Bitcoin or are planning to purchase it. The price is steadily rising, but there have already been cases in history when the value has fallen. Will this happen again and what is the reason for such fluctuations?

Introduction of control over cryptocurrency

The most important advantage of digital currency is anonymity. Payment system decentralized. There is no body that would in any way manage it, control transactions, or introduce restrictions. Many people choose Bitcoin based on this. Therefore, cryptocurrency costs a lot of money.

Recently, the European Union made a proposal to look at ways in which digital currency could be controlled and regulated. The EU wanted access to information about the owners of electronic wallets with bitcoins. This information is confidential. The regulator wanted to make it available not only to itself, but also to law enforcement agencies.

This proposal caused a stir among the public, especially among those directly involved with cryptocurrency. The anonymity of transactions and personal information is under threat. All this led to the fact that the cost of bitcoins fell sharply. People are afraid that a previously independent system will become centralized.

Division into two clans

Photo taken from medium.com/@neotronix/

While using the cryptocurrency, it became clear that the amount of memory in the block was not enough to store all the data about the owner of the wallet and the transactions he made. Developers of digital currency are divided into 2 camps in resolving this issue. Some suggested placing this information in an external unit. In this case, it ceases to be anonymous. The latter decided to increase the amount of memory. This opinion is shared by the majority of cryptocurrency holders. At the same time, some fear that some of the information about their transactions will become known to others, and this will reduce the security and reliability of transactions. In addition, solving the problem using the second method is a rather long process.

Mining depreciation

Cryptocurrency can only be mined. Moreover, when a new block is discovered, miners receive a reward. Many companies purchased the appropriate equipment to mine digital currency, but felt that the volume of rewards had dropped sharply. This was also reflected in the value of digital currency. It crawled down, although many hoped that Bitcoin, on the contrary, would rise sharply. But, alas, this did not happen. Unrest among cryptocurrency holders caused its massive sale.

The emergence of new cryptocurrencies

Photo taken from bitstocker.com/art/

Bitcoin fork – – bought. This has led to the emergence of a good alternative, another digital currency. There has been a noticeable outflow towards Ethereum. Traders believe that this cryptocurrency has potential. However, large investors are skeptical about it. It does not yet inspire trust like Bitcoin. It will take a long time before Ether secures a good reputation for itself. At the same time, the presence of an alternative cannot but affect the cost of the main cryptocurrency. The more such options there are, the higher the competition.

Bottom line

The cost of a digital currency depends on many factors that can contribute to both its reduction in price and its rise in price. The greatest decline in price is determined solely by the basic characteristics of cryptocurrency: anonymity, confidentiality.

The day after the publication in Kommersant of the full text of the draft law providing for the introduction of US sanctions against the Russian Federation, a sharp drop in the ruble exchange rate and stock exchange quotes began.

The first set of sanctions, which will limit US exports to the Russian Federation, will come into force on August 22. If within 90 days the Russian Federation cannot prove its non-involvement in the use of chemical weapons in the UK, sanctions will be tightened. These are expected to include:

• prohibition of transactions with the external debt of the Russian Federation;
• restricting the export of high-tech equipment, including for the oil and gas industries;
• restrictions on the import of oil and petroleum products from the Russian Federation.

According to American experts, the second set of sanctions will affect about 70% of the Russian economy and 40% of employed people.

Since then, the ruble has continued to depreciate rapidly, reaching a two-year low of 66.7 on August 9. This week was the worst since April 2018, when the Russian currency lost almost 7%. During these days, the dollar grew by 5.8% compared to the end of July and by 14.6% compared to January.

The depreciation of the ruble was accompanied by a fall in the stock price of Russian companies. The stock index lost 2%, Aeroflot shares - 12.2%. Prices of government bonds, which are very popular among investors due to their high yield, fell. Foreigners buy about 30% of Russian bonds. However, despite the increase in profitability and decrease in price, at the auction on August 8 only half of the planned amount was sold. Five-year Russian credit default swaps, which reflect the cost of insuring debt before default, have risen sharply. Compared to the beginning of the week, they increased from 133-134 to 154.

How a weak currency affects the economy: theory

A weakening of the national currency against the reserve currency (the dollar) means that more national currency is required to purchase 1 dollar. If a country actively participates in international financial and trade relations, this leads to the following consequences:

Exports are becoming cheaper

If the price of goods produced domestically does not change (costs are constant), when the value of export products is transferred from the national currency to the reserve currency, their price becomes lower. A fall in the value of exports makes them more competitive and causes their volume to increase. In addition, a depreciation of the national currency may cause demand for assets denominated in national currency.

Imports are becoming more expensive

The price of imported goods when transferred from the reserve currency to the national one increases. This causes an increase in domestic prices and a reduction in demand for imported products. In many cases, this leads to a reduction in the consumption of imported products, as well as a reduction in the number of any transactions that require the exchange of national currency, such as tourist trips.

Inflation is accelerating

Rising import prices cause inflation to accelerate. Many believe that, under normal circumstances, modest inflation increases overall demand and GDP growth.

The balance of payments deficit is shrinking

As exports rise and imports fall, revenues can exceed expenditures and the balance of payments position improves. An example of such a situation is Japan, which regularly depreciates its currency.

It would seem that none of the listed events looks particularly threatening. However, don't be complacent. In the humanities, economics is no exception, general conclusions are usually accompanied by a large number of reservations that can completely change their meaning. IN in this case the listed consequences, or more precisely, the degree of their manifestation, largely depend on the reasons that caused the depreciation of the national currency.

Reasons for the depreciation of the national currency

1. A fall in prices for the country’s main export product or a narrowing of sales markets.

The less diversified exports are, the more the currency can depreciate. A fall in prices for export goods leads to a reduction in export earnings and is an indicator of a decrease in demand for these goods. Since imports simultaneously become more expensive, firms are forced to spend more national currency on them, buying more reserve currency, the supply of which is declining. With an increase in demand and a decrease in supply, the price of the reserve currency rises, which means a simultaneous fall in the price of the national currency.

2. Deterioration of the balance of payments.

Occurs when a country's expenses exceed its income. The reasons may be the rapid growth of imports compared to exports, the growth of external debt or payments for its servicing. As the balance of payments deficit grows, reserve currency reserves are depleted faster than its receipts. This leads to increased demand and higher prices.

3. The central bank cuts the discount rate.

The profitability of investments decreases, which leads to capital outflow, causing an increase in demand for reserve currency.

4. Interventions of the Central Bank.

In an effort to increase gold and foreign exchange reserves, the Central Bank can make large purchases of reserve currency on the stock exchange, thereby increasing the demand for it and increasing the supply of the national currency.

5. Actions of stock speculators.

In anticipation of the events listed above, stock speculators may start to play short.

The nature of the impact of these reasons in each individual country can lead to very different consequences of the depreciation of the national currency. They can cause inflation to rise by 3%, or by 13%; can stimulate the growth of domestic production while import prices rise, or can lead to a reduction in investment; may cause an increase in the balance of payments surplus, but can also lead to an increase in its deficit.

It will fall, the only question is speed

Until recently, forecasts for the future of the ruble ranged from cautious optimism to relative stability. Information about possible sanctions has sharply changed the mood of experts, who are now far from optimistic. They have good reason for this.

Possible consequences of introducing new sanctions

The most serious consequences for the Russian economy, and therefore for the ruble, may entail a ban on servicing the state debt, the sale of high-tech goods for the oil and gas industry in the Russian Federation and the export of petroleum products to the United States.

1. A significant reduction in sales markets for the main export product - oil and petroleum products.

Russian companies will have to look for new markets for the 500 thousand barrels of oil and petroleum products per day supplied today to the United States. However, if they spread to the Asian and European markets, the situation will really become catastrophic, since in this case it will be necessary to look for new buyers for 5 million barrels. Given the highly competitive oil market, it will be very difficult to find them.

2. Significant increase in the cost of servicing external debt.

Already, in order to sell even half of the planned government bonds, the government had to significantly increase their yield, which means an increase in the cost of the loan received when selling securities. This means that an additional burden will be placed on an already deficit budget. Serving the increased deficit will cause inflation to rise rapidly as the government will have to print fiat money. According to City Bank experts, a 2% rise in bond yields will cause inflation to rise by 5%.

3. Reducing oil production and production of petroleum products

A ban on the export of equipment for the oil industry could stop the implementation of projects to modernize the industry and develop new fields. Especially if it is supported by European suppliers. In addition, enterprises will not be able to replace outdated equipment, which will inevitably cause a reduction in production.

Disappointing forecasts regarding the future of the ruble were published by Danske Bank experts a few days ago. They believe that if the sanctions law is adopted, the ruble could fall to 72 and the euro to 83.5. The most unpleasant thing is that the current situation has still not been commented on by either the Central Bank or the Ministry of Finance of the Russian Federation.

text: Oleg Kronin

MOSCOW, December 20 – RIA Novosti. The sharp decline in the price of the world's most popular cryptocurrency, Bitcoin (BTC), and the rise in price of Bitcoin Cash (BCH) is associated with market factors, in particular news from exchanges, according to experts interviewed by RIA Novosti.

On Wednesday night, BTC fell in price by more than 15%, and the cost of Bitcoin Cash rose almost one and a half times. According to the CoinMarketCap portal, as of 13.50 Moscow time, traditional Bitcoin (BTC) fell in price by 4.77%, to $17,574 thousand. On the Bitfinex exchange, the cryptocurrency decreased in price by 8.06%, to 17.389 thousand dollars. The cost of Bitcoin Cash on CoinMarketCap grew by 39.56%, to $3.25 thousand, and on Bitfinex by 44.72%, to $3.11 thousand.

Experts are confident that trading in both cryptocurrencies – BTC and BCH – was also influenced by market speculation.

Correction factor

As stated by the founder of the Blockchain.ru group of companies, Dmitry Matsuk, the most obvious explanation for such dynamics of cryptocurrency trading is the correction in the price of traditional Bitcoin. At the beginning of this week, the price of the cryptocurrency reached a new record price of 20 thousand dollars, and then began to gradually fall to 18 thousand dollars as part of the correction.

“Bitcoin has been growing rapidly since the end of September, and a correction simply inevitably had to come: previously, a correction for Bitcoin took place every two months, but since September the growth has continued continuously,” said Natalya Milchakova, deputy director of the analytical department at Alpari.

Matsuk noted that the correctional reduction in the price of traditional Bitcoin increased the demand for BCH. “When Bitcoin’s correction begins, it’s a good time for Bitcoin Cash to announce good news about its achievements and further positive plans. It was such news that led to the flow of money from Bitcoin to Bitcoin Cash, as a result of which the value of BCH increased,” he said.

Such good news was, for example, the launch of BCH trading on the Coinbase and Gdax cryptocurrency exchanges. Against this background, the value of Bitcoin Cash increased, but soon corrected.

Market News

At the same time, interest in BCH was fueled by negative news regarding BTC. Thus, the co-founder of Bitcoin.com Emil Oldenburg said on Tuesday that Bitcoin has no prospects as a trading currency. He said that he sold all his bitcoins, opting for Bitcoin Cash.

“This is a fork of Bitcoin, so it is logical that speculators began to massively sell the falling Bitcoin and transfer it to the cryptocurrency, which is a direct “competitor” of Bitcoin,” Milchakova explained.

According to her, the reasons for the reduction in the price of Bitcoin were not limited to one piece of news.

“The information attack on Bitcoin has been going on for several days. In particular, negative news came from Japan and Singapore. The Minister of Finance of Japan, one of the few countries where Bitcoin is legalized, said that he does not consider Bitcoin a reliable asset. The Monetary Authority of Singapore has issued a warning , which states that investing in cryptocurrencies carries increased risks for investors, since cryptocurrencies are not backed by any real assets and are not officially authorized as a unit of payment,” she said.

No speculation

As Mansur Huseynov, director of investments at the CryptoLife investment fund, notes, trading speculation in traditional Bitcoin and Bitcoin Cash also had an impact on trading.

“This is the result of the actions of large players who stir up interest in Bitcoin Cash, periodically buying it on exchanges and selling BTC. In this case, this coincided with the start of Bitcoin Cash trading on the American Coinbase and Gdax, where there are now more than 20 million users. Because Bitcoin and Bitcoin Cash are built on the same algorithm, they are fighting for the power of miners and cannot coexist peacefully. Moreover, the creators of Bitcoin Cash certainly want their currency to dominate,” he noted.

Economic crises have been sweeping our world one after another since the formation of civilization. What if we still haven't learned from our mistakes? Authorities different countries At the state level they are trying to ban the activities of crypto exchanges. A large number of investors are getting rid of cryptocurrencies, losing faith in their growth. At the same time, experts cannot decide on a position - to defend cryptocurrencies or advise investors to get out of the game. Today we will try to analyze the reasons for the fall of cryptocurrencies as a separate phenomenon in the modern world and answer the question whether the popular currency Bitcoin has outlived its usefulness. So, the fall of cryptocurrencies...

Why it is impossible to stop the fall of cryptocurrencies in 2018 and how Bitcoin “burst” in 2017

While regular currency exchanges have regulators who stop trading when the market collapses, cryptocurrency exchanges do not have the ability to control price collapses for electronic currencies. Thus, crypto market participants always react more aggressively to a fall in the value of cryptocurrencies than to a fall in a regular currency. For example, participants in the international foreign exchange market do not panic during normal price fluctuations, which cannot be said about investors in the crypto market. Even a slight drop in the cryptocurrency market often provokes participants to sell their digital coins, thereby further reducing their rate. Based on the above, we can say that one of the reasons for the collapse in the cryptocurrency market is the participants themselves. Large players who well understand the mechanisms of growth/decline also lose their positions early virtual currencies.

What is the reason for the fall of the Bitcoin cryptocurrency?

Bitcoin, which once changed the financial world, reached its peak growth in December last year, reaching the $20 thousand mark. Then the media heard news about the Chinese government revising its control measures over the cryptocurrency market. As a result, the volume of investments decreased significantly, and the BTC rate fell sharply to $12 thousand per piece. It is worth mentioning that earlier in China, by government decree, the work of large exchanges that provide their clients with access to trading on the crypto market was stopped. The collapse of the main electronic currency by more than 17% had a bad impact on the exchange, bringing down other cryptocurrencies with it. It became known that traders in Asian countries began to sell electronic money en masse due to the decision of the authorities in 2018 to impose a high tax on profits received from the sale of cryptocurrencies.

One of the reasons for the significant collapse of BTC in the cryptocurrency market was that investors are increasingly choosing new, in their opinion, promising electronic currencies. One of these can rightfully be considered the fard fork of Bitcoin Cash, which was previously separated from Bitcoin. Do not be surprised by the fall in the BTC rate when a new digital currency appears on the market.

Other reasons for the fall of cryptocurrencies

1. 1. Cybercrimes. In the modern world, cases of hacker attacks on cryptocurrency exchanges have become more frequent. Customers' electronic wallets are not properly secure. This is why investors decide to sell currencies and leave the market.
   2. Bearing or dumping. Some market participants themselves collapse the price of the currency, as a result of which they make money from it. This method is often used to sow panic through the sale of large amounts of electronic currency.
   3. Expert opinions. People who read the news and closely follow the cryptocurrency market will certainly come across the opinions of authoritative experts. Negative reviews may push them to sell a currency they are no longer confident in.
   4. "Damaged phone." Investors take into account unconfirmed and untrue information that the rate will soon fall, and begin to sell cryptocurrency in panic.

Economists advise getting rid of electronic currency only if the investor is confident that the currency is doomed to never rise again.

You can learn more about the reasons for the fall of cryptocurrencies in this video:

Cryptocurrency crash (January 2018)

In January of this year, the world community was shocked by the news about the ban on anonymity on cryptocurrency exchanges, adopted by the Council of the European Union. A blow to anonymity will significantly reduce the attractiveness of digital currencies and will certainly lead to new market crashes. As of February 2, the total capitalization of the crypto market is $432 billion, of which $152 billion is Bitcoin. On at the moment The following situation has been recorded with rates on the cryptocurrency market:

Leading expert on the problem of the fall of cryptocurrencies in 2018

Cryptocurrency will be forgotten, but it will exist for about 100 more years. This idea was expressed by scientist and Nobel Prize winner in economics R.D. Shiller, comparing the phenomenon of virtual currencies with the history of the Dutch tulip mania of the 1640s. According to him, the Bitcoin cryptocurrency will certainly face a crisis. He believes that until the final value for digital currency is agreed upon in society, Bitcoin has no value at all. The expert does not recommend putting cryptocurrencies on a par with financial instruments such as gold. Unlike Bitcoin, gold is highly valued and does not depend on the interest of society, while cryptocurrency depends on the interest of investors.

What is the reason for the fall in Bitcoin price today? — A question that torments most investors and traders, especially those who did not manage to sell cryptocurrency at a price of $12,000. Don't despair, all is not lost yet. It is possible to beat Bitcoin in its ups and downs, but you need to be extremely vigilant every second of the entire 24 hours of the day. In this article we will look at 4 reasons for the decline of Bitcoin, and also create a forecast + bonus - the approximate location on the calendar for purchasing the asset.

The main reasons for the fall of Bitcoin

There are many reasons that can be listed: the Binance exchange was hacked, bitcoins were stolen, a famous billionaire collapsed the system, and other unreliable nonsense. We will try to consider facts based on official sources, and not rumors. This will help us find not an excuse for the depreciation, but reliable reasons.

Binance Hack

Rumors of a Binance hack are circulating like a roaring lion all over the Internet. The first epicenter is located in Reddit. Posts were published allegedly confirming that all assets of the Bitcoin cryptocurrency were transferred by unknown persons to Ethereum and other cryptocurrencies. But here is the official statement from a representative of the Binance exchange:

At this time, only verified victims have registered API keys (for use with trading bots or otherwise). There is no evidence that the Binance platform is at risk.

Despite the unreliability of the rumors, they shook cryptocurrencies by 7% in a couple of minutes. The Binance hack itself gave rise to a new problem of user distrust in storing their crypto coins on such exchanges. Trust in Bitcoin itself has also decreased, since frequent hacks and asset thefts no longer surprise experts.

SEC Warning

The official warning from the US Securities and Exchange Commission to anyone who violates the rules of cryptocurrency trading is expressed in an ominous and threatening manner. Here is an excerpt from the statement regarding Bitcoin:

If a provider's offer seems too good to be true, or if you are being pressured into wanting a quick fix, please exercise extreme caution and be aware that you risk losing your investment

The formality and seriousness of the statement shook the cryptocurrency by another 10%, due to which the very important support level of $10,000 was broken.

The Japanese are rioting again

As you know, Asia, China and Japan are the largest holders of Bitcoin assets. The Japanese government has suspended the operation of exchanges: Bitstation and FSHO, the former for unfair use of user investments, and the latter for failure to comply with customer protection requirements. Also, according to official sources, the work of another 5 exchanges was suspended, and fines were imposed on them due to inaction on the part of the attacks.

Interest dropping again

Bitcoin was so popular in 2017 that it could easily outshine an actor or politician with his antics. They wrote about him, they recognized him, they tried to “find a common language” with him. Before the December fall, all investors were in the black. It didn’t matter whether you bought Bitcoin for $1, $1,000, or $17,000. Everyone had the opportunity to sell it for $19,000 on any exchange.

Now the situation has changed, if people write about Bitcoin, it is most often in a negative light, something like: “Ether has lost Bitcoin”, “How I lost $1000 on Bitcoin”, “Bitcoin is a pyramid” and so on. Only a minority of authors and experts are still writing about the $100,000 exchange rate by the summer of this year, and others.

Such a difficult situation can easily cause panic-sales to become terribly contagious. A panic sale can not only collapse the rate by 30%, but also destroy it, just as it happened with Ripple.

The downside of Bitcoin

Not everything is so gloomy and you know it. Now a little about the positive aspects that await the owners. These aspects may have a positive impact on the growth of Bitcoin:

1. IN South Korea will soon take measures aimed at legalizing Bitcoin and recognizing it as a liquid asset
2. The implementation of the Lightning Network (LN) protocol will improve the stability, security and efficiency of cryptocurrency

Let's face it

Let's face it, cryptocurrencies first fell by half on purpose, and then suddenly, supposedly because of good news, all cryptocurrencies rose sharply. A logical explanation: millionaires collapsed the exchange rate in order to buy something, then after purchasing, out of the blue, they sold the cryptos at twice the price and again collapsed the exchange rate.

First, they cut the price by half, then sell the coins at twice the price they bought. Elementary!

Essentially, an ordinary trader needs to wait a moment and place a buy order, and when the cryptocurrency is at its peak, place a sell order and that’s it! But not everything is as easy as it seems from the outside. This time it won't be the same as before. It is unlikely that you will calmly wait for the collapse, buy, and then sell at a high price.