Bitcoin has been on quite a wild ride in the past week or two with the coin plunging from a high of almost $20,000 just a month earlier to below $7,500 as of the second week of February. These fluctuations have caused a big disturbance in the world of cryptocurrency and continue to do so into the near future. A new report has come out detailing why this may be happening in the market, but the answer is not so simple.
According to the report “Bitcoin’s price is determined through a process of price discovery on exchanges, like GDAX, where it and other cryptocurrencies are bought and sold. But the bigger picture is more complex. Many factors, like regulation, possible regulation, or comments from a government official can affect whether people want to buy in on the crypto game. And that affects the price.” Many who are in the industry have stated that one of the main things affecting the price of the coin is the principle of market manipulation.
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As futures contracts came out for the coin, many individuals acknowledged the fact that those who bought into the futures were able to manipulate the coin into losing value so that they could make money in an easy way. Given that the market is still wildly unregulated, this seems to make a lot of sense as to why the coin has dropped so suddenly in value. Another aspect is that the market is still very much in its infant stages. This means that price fluctuations and high levels of volatility remain characteristic of the coin or any coin in the space for that matter. As the next few months come and go, the hopes are high that the market and bitcoin can begin to stabilize.