SiliconANGLE’s Mark “Rizzn” Hopkins Talks Bitcoin

Over the weekend, Bitcoin’s value dropped significantly, causing big concern within the cryptocurrency community. But is Bitcoin headed for an imminent crash, or is it just yet more hysteria that’ll be forgotten about in a couple of days time?

Bitcoin’s value hit a low of $290.83 on Sunday, but has now recovered and is back trading at above $300. At the time of writing, Bitcoin’s value is now $330.11, according to Bitcoinaverage.com.

So what’s caused the (slightly) alarming decline in Bitcoin’s value?

Mainstream adoption

Some argue the fall in Bitcoin’s price is due to the face there are now more retailers who accept it. These retailers use third-party payment processors such as BitPay, Inc. which allows them to accept Bitcoin and immediately convert it into fiat currency. Because of this, more Bitcoins are now in circulation, which is why it’s value has decline – so the argument goes anyway. There have also been claims of a supply-demand imbalance, as  high-profile online retailers like PayPal Inc. have indicated they’ll soon be accepting the cryptocurrency.

“It’s actually a lot harder to get bitcoins than it is to spend them and there have been some suggestions that that’s caused a supply/demand imbalance… PayPal integration would also improve that onboarding process,” Hugh Madden, co-founder of Hong Kong-based bitcoin exchange ANX, said in an interview.

Regulation worries

One of the reasons Bitcoin gained popularity is its lack of regulation – no bank or government has the power to control it. But unfortunately, this may change as governments, banks and other financial agencies are trying their best to get a handle on Bitcoin. Not long ago, the New York State Department of Financial Services proposed rules to regulate virtual currencies.

The rules are intended to protect Bitcoin users, but there are concerns they could lead to full regulation of Bitcoin and other cryptocurrencies. If this happens, the benefits offered by Bitcoin (like low or no transactions fees) will change. This threat is said to be one of the reasons why Bitcoin’s value saw a huge drop over the weekend.

Early adopters are selling

According to Madden, if you look at publicly available exchange trade data, you’ll see that early adopters have been selling off large amounts of their Bitcoins. The reasons why these people are selling haven’t been determined, but if the rumors are true, it means is there are more Bitcoins on the market, thus adding to the supply-demand imbalance mentioned earlier.

Opportunity knocks?

For anyone who has money invested in Bitcoin, the price drop will be cause for concern, but it’s not all bad. Bitcoin is still popular with millions of people around the world and it’s gaining wider acceptance every day. None of this is in dispute, and now, there’s a chance the publicity about Bitcoin’s low price might tempt more people to buy some.

Bitcoins haven’t been this cheap for a long, long time, so if you’ve been thinking about doing buying into it, now’s the time to act! :-)

photo credit: btckeychain via photopin cc