The price of Bitcoin the last few days started to drop drastically and it is now catching attention in the Bitcoin community. Looking at the Coindesk Bitcoin Price Index Chart, we have collected the following data. Before reward halving, the price gone up to its highest point this year at 768 USD per Bitcoin and it stayed in a $650 level since the last week of June until the end of July. Many have noticed in July 31, the price of Bitcoin started to plummet continuously from $655 to $542 as of this time of writing. The questions that we all have now are why and how did this come about.
We made some research and have come up with three probable reasons why the price of Bitcoin has dropped.
Firstly, according to NewsBTC.com, the closed door meeting between the leading mining operators and Bitcoin Core developers caused the descend of the price. This was not the first time that they meet and ever since, the meeting goes around the issue in increasing the size of the blockchain. NewsBTC also have noticed that every time this event happens, the price drops.
NewsBTC have gathered some information that there are nearly twenty four participants in the event which includes people from Bitcoin Core and Lightning Network developers. It is believed by many that Lightning Network can solve the issues like the block size and other scalability problems. NewsBTC also added the hearsay that miners are going to switch to other Bitcoin client which, as said, will further affect the price.
Secondly, Coindesk stated that according to their sources, the price drop is an effect to the increase in votes for ‘Bremain’, UK to stay in the European Union, before the official results. As we look on the news before, one of the reasons why the price of Bitcoin raised to this year’s highs is because of the dominating votes for ‘Brexit’, UK to exit the European Union.
Many have believed that Bitcoin is taken advantage by the investors or traders to bypass any macroeconomic difficulties. NewsBTC cited Brexit and the uncertainties in China as examples for this belief.
On a Coindesk interview to Arthur Hayes, CEO and co-founder of Bitmex, he said that the drop in the price tells that a lot of traders believed that the votes for ‘Bremain’ dominates. He also predicted that if ‘Brexit’ prevails, the price will rise again to $700 point whereas if ‘Bremain’ holds, the price will stay at $550 level.
*The result of the European Union referendum is very close at 51.9% and 48.1% in favor for UK to leave the European Union or ‘Brexit’.
Lastly, Coindesk also made a post that the cause of the price decline is the unlikely response of the Bitcoin community to the news that Bitfinex was hacked. It was reported yesterday that Bitfinex, one of the major Bitcoin exchanges, have to stop all transactions to its website and have gone offline until now, as they are investigating the security breach and taking into account all the stolen Bitcoins of their users.
In addition, Bitfinex confirmed to Coindesk that there have been close to 120,000 BTC or more than 60 million USD was stolen through social media.
Taking Arthur Hayes prediction stated above, Bitcoin’s price may rise again to the $700 level since ‘Brexit’ won the referendum. On the other hand, Bitfinex problem must be resolved as soon as possible so as not to create further crash in the Bitcoin’s Price.