The price of a single Bitcoin held steady in the last 24 hours as an increasing number of news reports detailed hacks and scandals within the cryptocurrency ecosystem. At 13:41 UTC, Bitcoin was trading hands at $8,573.55, down 3.5% from its price a day ago. During this time period, the price of a single Bitcoin has mostly traversed a $600 range, reaching a peak of $8,970.11 last evening.
An analyst at Bloomberg has predicted a further slide of approximately 90% in Bitcoin’s price and
“a strong gravitational pull towards $900” because of the increasing number of coins in circulation from its blockchain.
“Parabolically increasing supply is the primary limitation to cryptocurrency market-price appreciation,” he said.
Bitcoin’s original mandate called for only 21 million coins in circulation. However, forks on its blockchain have multiplied the number of coins available to traders.
For example, Bitcoin offshoot Bitcoin Cash was forked from its blockchain and currently has 16 million coins in circulation. But its introduction did not result in a price crash for Bitcoin. Rather, Bitcoin rallied to new highs in December 2017 before beginning its current slump at the beginning of 2018.
The 10 most-traded cryptos moved sideways in the last 24 hours. Ethereum competitor EOS was the sole exception, registering an increase of 2.21% in the last 24 hours. The overall market capitalization of cryptocurrencies was $419 billion, down from $435 billion, at 14:00 UTC.
Hacks and Scandals: A Double-Edged Sword
There has been a spate of news reports about crime and criminals in the cryptocurrency ecosystem in recent times.
BitGrail, an Italy-based crypto exchange, filed for insolvency after theft of $170 million Nano, a cryptocurrency. The New Jersey Bureau of Securities has sent a “cease and desist” order to Bitstrades, an investment pool in Bitcoin, claiming that it offered the equivalent of securities to customers without registering with the appropriate government authorities.
Meanwhile, Europol director Rob Wainwright said yesterday that criminals are laundering $5.5 billion through cryptocurrency. But those criminals may not be using Bitcoin.
UK-based firm Elliptic analyzed Bitcoin blockchain data and concluded that only 0.6% of overall transactions there were illicit. Europe seems to be a favorite destination for illicit Bitcoins. It received five times as much as North American services. Elliptic hedged its findings with the caveat that the sample size chosen for its research may have been small.
News of cryptocurrency hacks and Bitcoin’s use in criminal activities is a double-edged sword. On the one hand, it helps generate news headlines and media mentions, a key factor in its price movements.
But it also provides the cryptocurrency ecosystem with an unsavory reputation and keeps investors, who might stabilize wild price swings, away.
Regulation might be a possible solution to the latter problem. Governments and states around the world have begun investigating the possibility of taxing various activities associated with Bitcoin.
Iceland, home to several Bitcoin miners, is considering a Bitcoin mining tax. Gibraltar is planning to police initial coin offerings (ICOs). After the recent Coincheck hack, Japan’s crypto exchanges are tightening their self-regulatory measures.
In the United States, Vermont is positioning itself as a destination for cryptocurrencies and has proposed legislation that institutes a transaction tax of $0.01 for creation, trading, and transfer of cryptocurrencies.
United Arab Emirates Gets Bullish On Bitcoin
Another state considering regulation is the UAE. According to a Reuters report, the regulators of Abu Dhabi’s International Financial Centre are thinking about creating a framework for virtual currencies. Bitcoin and other cryptos are not banned in UAE but Dubai’s financial services authorities warned investors about the perils of investing in ICOs earlier this year. Abu Dhabi’s move is good for the cryptocurrency ecosystem as it builds on other developments within the oil-rich Gulf nation. For example, money transfer giant UAE Exchange recently announced a partnership with Ripple.
Dubai also has plans to become the world’s first blockchain city, and developers there have already sold 50 luxury apartments priced in Bitcoin. There are already three cryptocurrency exchanges within the tiny nation, and the Dubai International Financial Center is poised to become among the top 10 leading destinations for finance by 2020, according to The Banker, an FT publication. Greater adoption of cryptocurrency protocols around the world will lead to more transactions and traction for coins and increase their valuations.