The day after Christmas saw quite a slide in the price of Bitcoin as it slid to a low of USD $415 early Saturday morning. A massive selloff in CNY pushed the digital currency’s value down 10% over the 24-hour chart within roughly 8 hours and has currently remained steady at $425 at press time (December 26, 2015). Volume in China has remained quite constant across the three major Chinese exchanges despite this quite a bit of it was selling over buying.
It seems we may not see the predicted $500 mark over the course of the next few days into the New Year. Bitcoin’s price climbed upwards within the two-week period before Christmas again reaching the $470 point, and the forecast was looking like a solid possibility. However, following the holiday on the 25th the value was pushed downwards over what some call the “Classic Christmas Dump.” Support is keeping the value above $400, but sentiment in China seems weaker than usual and a possible upswing may take some time. The bear-market has stepped in again, and there may be some significant reasons why.
The Chinese yuan has strengthened quite a bit in parity with the U.S. dollar at roughly 13 basis points to 6.4731 throughout exchanges. This has given speculation to the theory that Chinese investors are possibly jumping back into the yuan market over BTC. China’s spot foreign exchange market has remained active in the past for four days and shows steady progression.
The yuan may have picked up its momentum because of Zimbabwe adopting the currency as its sovereign money system. Zimbabwe’s currency has been victim to hyperinflation and lost close to all of its value. China is helping the country by “canceling debts,” Chinese news reports detail. Another reason for Chinese to leave the security of Bitcoin is due to rumors of upcoming regulations. Due to the recent reports of ISIL using the currency as well as the MMM ponzi scheme in Russia the government is looking down on the virtual money. So China’s central banking representatives are looking into stringent regulation and help from the authorities the publication claims.
Recently optimism for the currency’s price exceeding $1,000 in 2016 has been speculated by a few within the cryptocurrency community. Large venture capital investments have bolstered the idea that interest is quite strong with cryptocurrency and blockchain investments.
The currency has reached quite a milestone as 15 million bitcoins are now mined into the world, and scarcity has become increasingly imminent. The difficulty is getting harder for miners, and the great Bitcoin halving is approaching this July 2016. This means block rewards will drop from 50 bitcoins to 25 when miners are paid out for finding blocks. This will possibly create more demand for the virtual money as it will be much harder to mine it and most of the currency has now been found. Increases in mining technology like BitFury’s new chip implementation will also create more complex competition within the realm of finding blocks. All of this including positive media and strong interest from legacy institutions is cushioning people to believe the price will reach quadruple digits.
With the dump in price after Christmas just making the $500 mark seems grim. The price at press time is now only 7.5% down and sitting at $420 per Bitcoin and could remain in the low 400s for some time. Several technical indicators via the 24-hour chart show the price is in a bearish state but as the value dips resistance has picked up with people buying at lower levels. To some investors who feel the currency will hit quadruple digits most likely are buying now as they believe it may be the last time to purchase BTC at this rate.
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