Bitcoin: 3 reasons to understand the cryptocurrency meltdown and why it can continue to fall

Last year, the value of bitcoin digital currency fell by about 80%.

E-money is going through one of its worst moments since its inception a decade ago. In addition, in 2018, the global cryptocurrency market lost a value equivalent to USD 700,000.

While some badysts speak of the explosion of a bubble, others consider that it is the volatility of a high risk market.

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Alarms began to ring on Sunday when the price of digital currency falls by less than US $ 3,500.

Although in recent days, the value has slightly exceeded $ 4,000, the resounding fall of the past year continues to give investors headaches.

Anyway, those who bought in 2011 to a US dollar probably continue to sleep peacefully.

And those who sold these currencies when it reached its maximum value, almost $ 20,000 in December 2017, they will celebrate their earnings.

With this vortex, the cryptocurrency carousel does not seem suitable for people with heart problems.

1. Speculators panicked

"Speculators have panicked," said Naeem Aslam, Senior Market Analyst at ThinkMarkets, BBC Mundo.

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This has led investors to start selling bitcoins, causing the price of money to fall drastically.

However, Aslam warns that this type of financial panic behavior is usually followed by increases.

"I do not worry about this fall, because you can buy cheaper"

"I would buy even more if the price fell below the 3,000 USD, which is highly likely."

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But there are people who do not share Aslam's vision and withdraw from the market.

2. The explosion of a bubble

The gigantic increase in the price of bitcoin last year "It was definitely a bubble"says Craig Erlam, market badyst senior d & # 39; Oanda.

"Now that we realize what has happened, I would not be surprised to see a price fall below $ 1,000 before it stabilizes again," he adds.

The downward trend observed over the last few months has made the idea that a value close to US $ 6,000 is a stability parameter seems less reliable, he added.

"The inability of the price to go up whenever there is a rise, this is not a good sign"

3. "Miners" disillusioned

"Cryptocurrency miners" (people who generate new digital currencies when their computers solve complex equations) would be: loss of interest continuing to produce foreign currency.

This badumption is supported by the fact that the number of machines dedicated to the generation of bitcoins has decreased, according to data society and cryptocurrency services Blockchain Ltd.

The value of bitcoin is always determined by the intensity of supply and demand. And if the miners stop generating new coins, the value of the currency drops.

This causes the loss of market confidence. And if there is no trust, people start selling even more.

"It was a melodramatic meltdown"says BBC Mundo Charles Hayter, co-founder of CryptoCompare.

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On the other hand, the restrictions that have been put on the market in some countries have probably influenced, he adds.

Those who are willing to risk the swaying bags have already seen how the ship can be wrecked from one second to the next.

The giant of the Amazon knows it well, when it lost 95% of its value between December 1999 and October 2001, in full explosion of the bubble of the technological companies.

But in this case, the company has turned the page and its executive director, Jeff Bezos, is currently the richest man in the world.

Without a doubt, Amazon is Amazon, while the world of crypto-currencies manages money that exists only virtually.

However, few experts at this stage of the game are betting on a large-scale rebound.

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