Bitcoin Sets Another Major Milestone Despite Chinese Regulations
Just when everything looked perfect for Bitcoin, one swift move from a global powerhouse sent prices sharply dropping. Bitcoin briefly hit glory earlier this week by reaching $5,000 per bitcoin. However, just hours later, Chinese regulators announced it would ban organizations from raising funds by selling cryptocurrencies.
In a matter of moments, the price fell from roughly $5,000 per bitcoin to $4,584 per bitcoin before hitting its lowest price at the moment of $4,350.
The reason behind the regulation? The People's Bank of China claims that selling investments in cryptocurrency for cash counts as illegal fundraising.
However, many experts believe Bitcoin will quickly rebound from this drop.
"This type of news is 'universally' negative sentiment, within the crypto space, so we are not surprised to see a dip on all assets today," Fran Strajnar, co-founder and CEO of data and research company Brave New Coin, told CNBC. "We do not see this to be a lasting issue."
China's regulation on initial coin offerings (ICOs) does not technically influence bitcoin. However, the ruling certainly dampened the mood for investments in online currencies across the board. Some believe that those negative sentiments helped bring down bitcoins value, even if the drop was temporary.
Charles Hayter serves as chief executive and founder of the digital monies website CryptoCompare. In an interview, he referenced an old adage to make his case.
"A rising tide lifts all boats but the opposite is also true - with generally bad news reverberating across the ecosystem all cryptos have turned red together."
The regulation from China might come as a shock to those keeping tabs on foreign investments. Bloomberg reported that China's Bitmain Technologies continues to receive heavy investments. Bitmain Technologies is a company that makes equipment for bitcoin mining (yes that's a real thing) and it also mines its own cryptocurrency. With such investors as Sequoia Capital and IDG Captial, one would think that trust in investments meant a rising tide (to borrow the previously used metaphor).
Still On the Up and Up
Bitcoin fans, take heart! The cryptocurrency has come an incredibly long way even since the beginning of this year. At the start of 2017, Bitcoin's value was averaging a mere $1,000 per bitcoin. Analysts also indicate that the dip from regulations -- while shocking -- isn't enough to actually reverse a trend.
Strajnar said, "There is likely some profit taking since reaching almost $5,000 on bitcoin, but the amount of fresh capital that continues to pour in suggests this is not the start of a trend reversal."
For decades, some of the world's best minds have foreseen the rise of e-currency. Nobel Prize winner Milton Friedman took note of this, saying:
"I think the internet is going to be one of the major forces for reducing the role of government. The one thing that’s missing but that will soon be developed is a reliable e-cash."
At the time of this writing, the value has rebounded slightly back to nearly $4,400.