Bitcoin has lost more than 44,000 million in capitalization in January
The bitcoin has accumulated a fall of more than 45% since the six of January marked annual maximums in the 17.135 dollars per unit. Since then, the most relevant virtual currency has suffered an intense collapse that has led to bitcoin losing $ 10,000 clearly. In the current session, this cryptocurrency corrects around 11% and moves around $ 9,000 per unit. It seems that a platform called Bitfinex and its dubious practices may be behind the strong loss of investor confidence in digital currencies.
Its decline in January has wiped out about 44.2 billion dollars from the capitalization, until it falls below the 200 billion dollars in market value in which it moved last year; the monthly loss in dollars is the largest in the short history of the digital assets, as highlighted by Bloomberg.
According to The New York Times, there is growing concern about bitcoin and the way in which its prices have reached record highs. More and more virtual currency investors believe that the prices of bitcoin and other digital tokens have been artificially benefited by a widely used platform called Bitfinex, which has a history closely tied to piracy and opaque business practices.
In December, Bitfinex was cited by the Commodity Futures Trading Commission (CFTC), a US regulatory agency. A source familiar with the citation has confirmed the investifation, while suspicions of virtual currency prices have been boosted through this platform. The news of the investigation, also advanced by the Bloomberg agency, has brought a massive sale in most virtual currencies.
How does Bitfinex work?
The people behind Bitfinex issue a virtual currency called a tether. Unlike most digital tokens, it is assumed that each tether is backed by traditional or fiduciary money. For example, the US dollar. New tether tokens are issued when investors give dollars in return. A dollar is worth a tether chip.
Thanks to the credibility granted by this type of operation backed by fiat money, many tethers were exchanged for virtual currencies such as bitcoin. In case the investor wanted to undo the transaction he only had to sell his bitcoin by tether (much simpler than exchanging bitcoin for dollars directly) and then change the tether for dollars or the fiduciary currency that backed those tokens.
But this beautiful story in principle seems that it will not have a happy ending. In recent months many investors have been warning about tether. Hundreds of millions of dollars were created in new tethers; almost always when the prices of other virtual currencies fell sharply in the market. The tethers were used in the Bitfinex platform to make large purchases of bitcoin and other tokens, which helped increase their prices.
Now, market experts and agents speculate on the reason for Bitfinex's citation with the CFTC. Some believe that Bitfinex has not saved the dollars that their clients gave in exchange for tokens, so if at any time a wave of investors want to recover that fiduciary money they will find a full-fledged 'corralito'.
This situation is sinking virtual currency prices, as highlighted by The New York Times. In addition, regulators in South Korea and the US continue to increase pressure on these markets, given the growing concern about possible market manipulations and other practices of dubious legality.
Experts see more volatility
"Recently, when we reached $ 10,000, the cryptocurrency adopted the image of a bullish asset that was always going to find a base and go back up," said Stephen Innes, Oanda's director of operations in the Asia-Pacific region. "When we talk about the realm of assets with greater risk and something loses 50% of its value, that tells me that it will keep going down, the sad thing is that many people will be harmed, because they will continue to buy things that go down".
Since reaching its ceiling, close to $ 20,000, in early December after the futures contracts were presented on regulated US exchanges, a series of negative news has hit bitcoin and rival cryptocurrencies. The setbacks have intensified since the beginning of 2018.
On January 26, the theft of the record $ 500 million in a digital currency in Coincheck, a Japanese stock exchange, increased pressure on regulators to investigate business practices within this industry that operates outside of frameworks. legal In South Korea, one of the most active countries in virtual currency operations, the authorities are still debating tougher measures, including a ban on such bags and platforms.
India gets serious
The Government of India has announced that it will take "all measures" to end the use of cryptocurrencies as a method of payment in the country and warned that it does not consider them legal currencies.
"The Government does not consider that cryptocurrencies are legal tender or currency and will take all measures to eliminate the use of these assets in the financing of illegitimate activities or as part of the payment system," said Finance Minister Arun Jaitley , in the Indian Parliament during the presentation of the State budget. Jaitley's announcement comes after the government took action weeks ago to control the use of bitcoin as a method of money laundering.
In December inspectors from the Indian Tax Department stormed bitcoin exchange centers in Delhi, Bangalore, Hyderabad, Kochi and Gurgaon in search of evidence to identify investors and traders and transactions made. The Reserve Bank of India (RBI, in its acronym in English) has also reiterated in the past its distrust of these virtual currencies.
"No regulatory approval, registration or authorization has been declared by the entities interested to continue with these activities" of exchange of bitcoins, said the RBI in December 2013, a position that it has maintained over the years.
Given all this confusion about the future regulatory framework of virtual currency, Innes anticipates that the cryptocurrency will continue to plummet to reach the range of 5,000 to 6,000 dollars, although later it will recover again to reach 10,000 or 15,000 dollars. It will undoubtedly be a broken path, given that from now on the world authorities will examine more the cryptocurrency industry, he said.
