In the last week the Bitcoin price has dropped from a high of R66 000 to R44 900 at time of going to press. This is according to South African exchange Luno and amounts to an astonishing 29% decrease. The drop is rumoured to be caused by multiple factors, including the recent banning of ICOs in China, JP Morgan CEO Jamie Dimon’s severely critical attack on Bitcoin, and, most damaging, the recent announcement by Chinese exchange BTCC that it will be closing down its China-facing trading operations effective September 30.
The ban of ICOs in China certainly had an effect on the market with the Bitcoin price dropping from its all time high of R69 489 on the 1st of September to settle around R61 000 on the 5th of September, one day after China made the announcement that ICOs would be illegal. However the decrease was only temporary as the price recovered quickly to R67 000 on the 6th of September. Meanwhile, the rumours that Jamie Dimon’s comments had an effect on the price are hardly justified and barely noticeable in the graphs. Investment bankers have always had a pessimistic stance on cryptocurrencies because they pose the threat of dismantling their institutions and Bitcoin traders would have paid little attention to the ramblings of Dimon who has been a long-term critic of Bitcoin.
The last three days have seen Bitcoin’s biggest correction since July. This comes as a direct result of reports that Shanghai-based bitcoin exchange BTCC will shut down its domestic trading operations. This follows the rumours that China is planning on banning all Chinese based exchanges, despite the People’s Bank of China releasing no official statement on the matter. Technical analysis of the graphs sees the Bitcoin price settling at R42 000 to R45 000. This author sees this as a great buying opportunity as some experts such as John McAfee still see Bitcoin reaching R70 000 by Christmas. This is a good time to also remember that a loss is only a loss once it is a realized loss.