Cryptocurrency has witnessed a huge upsurge in its value in the recent times. Investors having surplus funds at their disposal are considering Bitcoin or other altcoins for investment purpose. Looking at the current popularity of cryptocurrency, one would not doubt investing in one. However, there might be some circumstances leading to a cryptocurrency crash.
The year 2017 proved to be quite profitable for cryptocurrencies. The shocking upsurge in Bitcoin’s value led an increase in the prices of other cryptocurrencies as well. Since the value of cryptocurrency directly affects the values of other altcoins, it is noteworthy to realize how a minor increase or decrease in the values of Bitcoin can either be beneficial or risky for the investors.
Why Makes a Cryptocurrency Crash?
So, the point to ponder is, what could be the possible reasons behind a cryptocurrency crash? What could make a cryptocurrency to experience a downfall? In our point of view, there are some reasons that might be causing towards a cryptocurrency crash. Let’s quickly dive into the reasons that may have caused a cryptocurrency crash in the past or may continue to pose a threat to its existence in the days ahead.
Banning Cryptocurrency Ads
There was an abrupt decline in the Bitcoin’s price when Google, the internet’s biggest digital advertising platform, decided to put a ban on all the cryptocurrency related ads. The cryptocurrency ads related to initial coin offerings (ICOs), trading advice as well as crypto wallets were also banned from being advertised on Google. This turned out to be one of the major reasons behind the cryptocurrency crash.
Mt. Gox Exchange Downfall
As soon as the news of the massive collapse of the renowned cryptocurrency exchange Mt. Gox surfaced around a few months ago, it created quite a stir among the crypto community. The downfall of the doomed exchange is also responsible for the tumbling crypto market. The reason Mt. Gox is considered a reason behind cryptocurrency crash is that its trustee, Nobuaki Kobayashi has supposedly retained a large number of coins even until today. He was the person responsible for plummeting the Bitcoin’s value below $60000 with his immediate sell-off plan.
Despite cryptocurrencies becoming popular among the investors and many financial institutions beginning to come to terms with, there are several regulatory restrictions surrounding them. Regulatory ambiguity is also playing its part in creating a doubt about cryptocurrencies in the market. A few weeks back, when Coincheck, one of the leading cryptocurrency wallet and exchange service in Japan, was hacked with $500 million, the Japanese watchdog decided to put some regulatory obligations on cryptocurrency exchanges operating in the country. Lately, it has penalized six cryptocurrency exchanges and at the same time has also ordered Coincheck to make further improvements in its overall security system.
Banks Showing Reluctance
Apart from the regulatory uncertainty, there are some banks who have still not fully accepted cryptocurrencies as a mode of payment, thus leading to the overall cryptocurrency crash in the market. In fact, they are putting an added pressure on the crypto market by not allowing their customers to purchase cryptocurrencies from their debit or credit cards. For example, HDFC Bank in India has banned its customers from using their plastic cards to purchase cryptocurrency purchases.