As of 5:55 pm on August 18, the price of Bitcoin, according to the Bitcoin Price Index (BPI), had declined by more than $60, making the price of Bitcoin $435.60- an all time low. It then declined further to $309.
Industry analysts are searching for reason behind the changes. Many attribute the price decline due to worsening short-term outlooks as well as the possibility of margin traders. In fact, Raffael Danielli, writer for quantitative analysis blog Matlab Trading, maintains margin trading is the primary cause behind these movements, as well as the resultant ripple effects. In an interview with CoinDesk, Danielle seemed confident prices would rebound,
We have seen crashes like this before and they follow a certain pattern, namely a sharp drop followed by a swift rebound to about a bit less than the previous level.”
Danielle also expressed frustration at the lack of information available within the market, which makes it very difficult to determine the cause behind such dips, as well as a pattern.
Just to be clear: the only people who really know what happened are the ones operating the exchange. What we observe here is only the tip of the iceberg and we lack many pieces of information that the exchange has.”
However, many major bitcoin exchanges are in favor of margin trading, as they maintain that they inform traders of risks as well as establish safeguards to limit any damages in the market. In regards to accusations of a purposeful lack of transparency, many exchanges argue that the lack of transparency is to avoid traders using the information to their advantage.
If it becomes public knowledge traders can use it to their advantage and find out ways to get around our preventative measures,” said OKCoin’s manager of international operations Zane Tackett
Bitcoin remains a controversial issue among consumers. With recent warnings published by the CFPB, as well as the seeming volatility of the market, it appears likely the virtual currency will continue to be doubted by many.
Read more here- “ Price of Bitcoin Drops Below $400 n BTC-e Flash Crash,” (Pete Rizzo, CoinDesk)
Olivia is a graduate of Villanova University where she studied Economics and History, minoring in Gender and Women's Studies. She also has experience working with federal legislatures on health care policy, women's issues, and Internet safety.