After breaking several records in quick succession this month, bitcoin rally seems to be on the verge of dying. The volatility, which took the bitcoin price to near $20,000 last weekend, is exhibiting the wrong side of swing, taking the crypto currency lower by 30% from its peak achieved on Sunday. The sceptics say that the bitcoin prices were profoundly artificial and extremely speculative in nature, since the prices surged chiefly in run up to the launch of futures by CBOE and CME Group. At 2.25, the bitcoin price on Luxembourg-based BitStamp was trading at $13,300 (equivalent to Rs. 8,51,200), while the same is available for Rs. 8,18,000 in India-based Zebpay, against its price that surged past Rs. 11 lakh a day ago. However, instead of panicking, this may be the right time to invest in the bitcoin if you were waiting in anticipation for the prices to turn affordable.
Ten Things To Know About Bitcoin, Its Rise, And Plunge
In Indian markets, the bitcoin was trading around Rs. 8.18 lakh (at 2.24 pm) while the currency had surged past Rs. 11 lakh on Thursday. On Zebpay, the bitcoin's buy price was Rs. 8.18 lakh and the sell price was Rs. 7.33 lakh.
Bitcoin plunged below $13,300 on Friday, and to $15,600 on Thursday. It had touched a record high of $19,666 on Sunday.
The cryptocurrency traded at around $1,000 at the year's start. It had surged to a record high of $19,666 on Sunday in the lead up to exchange giant CME Group's launch of its bitcoin futures. It has since lost about a third of its value.
Bitcoin is known for massive volatility. In November, the currency dropped to almost 30 percent in mere 4 days from $7,888 to $5,555. In September also, it had fallen 40 percent from $4,979 to $2,972. "Trading in bitcoin is akin to gambling, so its movements don't follow logical patterns," said Takashi Hiroki, chief strategist at Monex Securities in Tokyo.
Bitcoin has witnessed an array of price drops after it hit a high of near $20,000 on Sunday. On Tuesday, the bitcoin price dropped below $17,000, accounting for a $1,800 drop on that day.
With massive surge in bitcoin prices, other cryptocurrencies have become popular and there is some flight of capital to these relatively new digital currencies. This is quite evident from the rise in prices of alternative currencies such as litecoin lately. Litecoin was trading around $85 last month while it is currently trading at $329.
Another cryptocurrency Verge jumped nearly 800% in the week ended Wednesday. Other digital currencies such as Ripple and Stellar are also drawing enthusiasm from the investors with high-risk appetite. These alternatives were certain to put a lid to the bitcoin rally soon or later.
In view of the lack of any positive cue, the bitcoin prices have no reason to be on fire. Earlier, the launch of futures trading by the US-based exchanges lent a semblance of legitimacy to the new-age currency.
There have been a series of statements and warnings issued by the governments around the world that put the bitcoin investors and potential investors on the backfoot. South Korea's Financial Supervisory Service said on Tuesday it does not consider bitcoin and other cryptocurrencies to be currencies of any kind.
Also, Japanese Finance Minister Taro Aso on Tuesday said that bitcoin had not been proven as a credible currency.