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December 6 2013 – Bitcoin Price Tanks

In something I did not expect, the price of Bitcoin has been tanking. Just a few days ago it was at its all time high of over $1200, and as of today we are looking at under half of that. What caused this massive drop and many people to jump out of their investments? China backed out, saying that they are able to utilize Bitcoins but can not allow exchanges for fiat. In other words, if you can find others that accept Bitcoins you are good to go. But if you need to pay for anything that uses fiat, you are just out of luck. This limits the viability of Bitcoin and other crypto currencies there, and in effect has caused them to start selling off what they have. Furthermore, the news has impacted other countries as well, where the news caused a mass panic sell. Because of that sell, others have jumped on board and started dumping theirs as well, and after only a day and a half now, we are already at half the value we were at recently. That is a massive, massive drop and is something we have only seen one other time in the past: when the price went from $220 or so down to $60, declared as a “Bitcoin bubble.”

There are some different theories at this point as to what the bottom price is going to be. Honestly, even after the news of China I was pretty surprised to see that the price did not drop too much. The drop it did take was bounced back pretty shortly thereafter. The last thing I expected was to see it, hours later, start dropping faster and faster. This is some pretty bad news, and it is leading to confusion as to how far it is going to go. I have seen theories that we are going to see a bottom price of $200 or so again, and others claim it is going to stop at around $500. Either one of these is still way above where we were a few months ago, but they are also way below where we just left. Those who sold out at the top, right as it was starting to tank are going to be making some serious bank, and now they can buy in and get even more coins than they started with. On the other hand, the question is when to invest again.

There is only one thing that is certain at this point; Bitcoin is showing just how volatile it really can be, and helps illustrate some of the issues with the system when it comes to trying to turn it in to a currency that we can use at stores and as a real store of value. With such volatility as we are seeing, it would be pretty scary to think about someone having enough money to buy something one day and the next finding out that they have only a small fraction of what they started with. This is something we absolutely have to get away from if we want Bitcoin and other crypto currencies to be successful, and at this point it is almost as if we are just staring at a brick wall.

For those that are looking for advice on what to do at this point, it is anyone's guess. Reading through theories people have and following various messages, people are all over the board. This drop in price was completely unexpected and while we do expect changes here and there to happen, we did not expect something this big and this fast. While I do not have any doubts that we are going to end up recovering at some point, the question is how long that is going to take and what we are going to end up recovering to. One of the big selling points of Bitcoin was being able to transfer wealth from one country to another quickly and easily, and this news from China is hindering that ability. Especially with how much money their economy was dumping in to our system, this is some upsetting news. Hopefully at some point they reverse their stance and allow it to be used at exchanges in China, possibly just setting up some regulations like we are currently facing here in the United States. If this happens, maybe, just maybe we can bring them back on board and get this puppy rolling again! Here is to wishful thinking!

Bitcoin | News


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