Bitcoin Price Falls Below $7k as Investors Count Their Losses

On Monday this week, the cryptocurrency market was hit once again. Bitcoin price experienced an all-time low since November last year. The huge price drop was experienced across more than 95% of the top 100 coins. However, this drop did not come as a surprise. With multiple hackings of ICOs and cryptocurrency exchanges, the negative news were expected to affect the market sooner than later. This drop in prices of cryptocurrencies can be attributed to some of the following happenings:

The Japan’s Coincheck $530 million heist

Late last month Coincheck exchange saw one of the biggest cryptocurrency heist, of about $530 million, ever seen. This was not the first time Coincheck suffered such a loss in the name of hackers. Last week, Japan’s Financial Services Agency stormed the offices of Coincheck to collect evidences of what went wrong. This raid could push for customers to be refunded and minimize future losses due to hacking of exchanges.

Big banks ban on the purchase of bitcoin using credit cards

Big banks like CitiGroup Bank, JP Morgan Chase, Bank of America, and now Virgin Money have banned the purchase of bitcoin using their credit cards. The ban kicked off on 2^nd February, last week. According to Bloomberg, JP Morgan and Bank of America have cited worries of the credit risk as the major reason for the ban. However, the Bank of America’s ATM and debit card holders are excluded in this ban. This ban has come at a time when investors are looking to buy into the dip, and banks are concerned their credit cardholders may buy more than they can afford.

China’s crackdown on offshore cryptocurrency trading

China has already banned crypto trading among its citizens. This was a domestic ban in September, last year, on all the crypto exchanges and ICOs. However, traders in China found a way to continue trading using exchanges from abroad. In the recent past weeks, the People’s Bank of China in liaison with China’s Central Bank began a crackdown on offshore crypto trading, by its citizens. This has taken a great toll on the cryptocurrency market which has seen it shed off more than half the market capital since the start of January this year.

Will the dust settle?

According to cryptocurrency investors, this may just be another hiccup that is bound to die down in the near future. Japan is looking to put tighter regulations after the $530 million heist on CoinCheck and with investigations ongoing, customers will get a refund of what they lost. For big banks banning on bitcoin credit purchases, it makes a lot of sense. Cryptocurrencies are highly volatile, borrowing to buy bitcoin could be risky and banks see this as a threat to their business.

Finally, China’s crackdown on offshore trading by its citizens means that Hong Kong and Japan exchanges that serve most of China’s traders will move their exchanges elsewhere. Once the dust settles, the cryptocurrency market will correct itself and the prices will start moving up.