A Look Into the Chinese ICO Ban and Russia Comments
Bitcoin has experienced what is arguably the most volatile period in September since its inception with prices surging from a record high of $5,000 USD dipping to a low of $4,000 USD within the span of three days. October promises to potentially further dip the cryptocurrency market into unchartered waters. Reasons being:
Chinese ICO Ban
ICOs (Initial Coin Offerings) allow companies to fundraise without regulations that come with traditional methods. The Bank of China’s announcement of an impending ban on ICOs on September 4th saw many people dump their holding for fear of a bust. Well, China’s government has already declared ICOs illegal and taken them offline.
Impact of the Chinese ICO Ban
This announcement by Chinese regulators caused a temporary initial 12% drop in Bitcoin prices from $4900 to below $4200. Other cryptocurrencies like Ethereum and Bitcoin Cash also experienced a combined decline in prices. However, within days of the ban, prices seemed to have recovered in the cryptocurrency market.
ICOs are seen mainly as a way to raise funds without the scrutiny that comes with more traditional methods like the sale of shares. This attempt at regulating them may prove to actually strengthen the value of existing cryptocurrencies in the future by limiting the influx of alternatives and protecting investors from scams and ponzi schemes. Time will tell.
Mainstream Media and Russian Comments
The attention that mainstream media has focused on the cryptocurrency market since news of the ban has raised and driven more publicity to the Bitcoin and cryptocurrency market, and gotten more people aware. Prices actually increased after the ICO ban by China once the smoke had settled, and they continue to do so despite the doom and gloom prophesied by naysayers and skeptics.
The recent focus of Russian President Vladimir to digital currency, however negative, has only acted to spur greater interest. As the saying goes, there is no such thing as bad publicity, and Bitcoin’s continued price increase is a testament to this. We may continue to see the prices increase as Bitcoin strengthens in the face of all these global obstacles.
Financial and Economic Instability
With the increased tensions between world economies and the uncertainties that surround them financially, more people will likely feel safer investing in cryptocurrencies. A financial crisis could cause investors to flee the conventional financial market and seek ‘safer’ investments and payment alternatives in the digital currency market. This could see the cryptocurrency market experience an influx of investors and users in general.
If the ban on ICO stands and regulating authorities and institutions find better ways to manage the risks involved with investing in the cryptocurrency space, (i.e. scams, money laundering, etc.) it would improve public confidence in this market and encourage more people to invest.
All these possibilities remain to be seen, and only time will tell, as the cryptocurrency market remains potentially volatile for some time, making it impossible to draw a definite assumption right now.
Are you considering investing in Bitcoin? Below are for reasons why you should join the bandwagon.
- Bitcoin has a lower risk of inflation because it is a global, decentralized currency that is not controlled by any single government or financial institution (that merely prints more money when there is a shortage). The Bitcoin system is designed to be finite, meaning it will only mine a definite number of coins.
- Bitcoin offers a cheaper transaction option. Bitcoin offers minimal charges as compared to other online payment platforms.
- Bitcoin is “portable”… i.e. It is easier to “carry around” Bitcoin than it is with any other currency, as it is in digital form and therefore movable via a hardware wallet or even a mobile app.
- By virtue of it being a global currency, that is not controlled by any one government, Bitcoin is believed by many to be at a much lower risk of collapsing vs. any of its fiat currency counterparts.