It has been a tough week with news of a sharp decline and a looming bear market. It seems cryptocurrency is taking a harder hit as compared to the traditional market. Bitcoin fell as far as 75% from its ATH in December. There are a few possible negative catalysts for the plunging of cryptocurrency prices as bitcoin is not the only one to take a hit. Other digital currencies have experienced their fair share of loss this past week. But what could be the reason for the bear market?
Bitcoin Hash Wars
The bitcoin cash network forked from Bitcoin (BTC) last year after a bitter fight between the developers who managed the community. This year another argument arose in the Bitcoin Cash camp that led to the network splitting into two groups. The new fork created two new cryptocurrencies, Bitcoin ABC and Bitcoin SV. What this disagreement in the BCH camp has caused is a chaos in the market. Exchanges had to go through a tough time decoding which cryptocurrency they wanted to trade while the market was hit with a panic as bitcoin dropped.
Unregulated Exchanges
Cryptocurrency exchanges often enjoy a certain freedom. There’s no watchdog watching over their neck and this has led most investors into dumping in a lot of funds. Bitfinex a crypto exchange has been called out for using Tether Coin to artificially pump up the price of bitcoin and other digital tokens. Researchers at the University of Texas published the evidence and investigation are ongoing to determine if the price manipulation is true.
Tough Regulations
The Securities and Exchange Commission is clamping down hard on companies violating the securities law with their offerings. Across the world countries like India and China are taking crypto regulations seriously and clamping down on crypto companies. Just last week, the SEC fined two companies $250,000 each for failing to follow the proper laws for registering securities. Paragon, one of the firms, is working to legalize cannabis and utilising cryptocurrencies.
We do not know how long the bear market would hold, however, some crypto analysts are sure it wouldn’t be for long. Some even think it’s the market’s way of testing those with weak hands and shaking them out.
What do you think might be the cause of the bear market? Share your opinion with us in the comment section below.
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