Bitcoin Price Hits 11-Month Low After Steady Decline

Over the previous year, bitcoin has seen a steady and deep dip in the value of bitcoin. Since December 2013, when bitcoin prices were briefly at $1,100/bitcoin, prices have decreased, reaching $270 on Sunday, October 5 and popping back up to $330 on Monday. Economists have identified three potential causes of the price depression. One is the increased number of businesses accepting bitcoin, increasing circulation of the currency. Another, the most prominent factor of the current decrease in value, is speculative trading.  The last cause, and likely the most important in the long run, is the quick and large-scale generation of new bitcoin.

In order to complete bitcoin transactions, some users process transactions using high-powered computers and in exchange for the service, bitcoin is generated and used as payment to the operators. This means with everyday that passes thousands of bitcoin are mined, translating to millions of dollars. Some portion of the bitcoin gathered from mining must be sold by miners for the upkeep of their machines, meaning mined bitcoins must re-enter a market which does not necessarily have the demand to absorb them all.

Unless the market can absorb the new bitcoins which miners sell, the price will fall,” said economic historian Dr. Garrick Hileman of the London School of Economics.

Regulatory concerns, competition with other payment methods, and the strength of the dollar will all affect the price of bitcoin in the future. Despite the steady decline, some have pointed out the price of bitcoin today is still well above what it was one year ago when it ticked in at $120/bitcoin. While this is good news for those who have been in the bitcoin business for more than a year, any newcomers are seeing a steady devaluation of their investment.

Read more – Bitcoin Price Falls to 11-Month Low (BBC)

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Originally from Gaithersburg, Maryland, Millan is a senior at the George Washington University studying Biological Anthropology.

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