Bitcoin is known for its meteorological ascents and descents. However, the price has shown in the last few months a lot of upward momentum.
Since Bitcoin has exceeded in December 2017 the $20,000 mark, people wait on a return of the bull market. However, there are a few things that can keep the price low. Here are some reasons why Bitcoin reached in the near future there may be no new highs are.
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The strange case of the Bitcoin price
Since its creation, Bitcoin is known for its dramatic price fluctuations. A verzehnfachtes growth from a decline of 90% are not uncommon – are not followed for Bitcoin today.
Bitcoins highlight came at the end of 2017 – at the time BTC reached almost $ 20,000 before he returned back to the earth. Thereafter, the price began to fall more and more. As you could see clearly again, had Bitcoin found its floor at under $ 4,000.
Since this low point of Bitcoin climbed slowly back up to the top, ranked 2019 usually between 7,000 and 11,000 dollars. Many people assume that the “good times” will come soon enough. However, a large part of the community remains skeptical.
1. Institutional investors are only slowly gaining momentum
For years, talked about institutional investors entering into the crypto space. Bitcoins properties (such as decentralisation and security aspects) make it an ideal investment instrument for all types of traders.
The institutions hesitate to take the whole step. Although there are some efforts in this area – such as institutions, offering Bitcoin Futures contracts, and other crypto-currency derivatives to investors. Many were hoping that the Start of the Bakkt-platform would attract investors. The Start was difficult.
There seems to be two important reasons why institutions continue to have cold feet. The first of the X factor, the Unknown that goes hand in hand with the investment in Bitcoin is easy.
Although there are Bitcoin for almost a decade, for many crypto-currencies are but an Experiment. Nobody knows Bitcoins fate.
He could go the MySpace way and other crypto-currency to pave the way to accept the domination. Or the entire crypto-currency market could disappear – it would then be a failed Experiment.
The other Problem is that many institutions see with Bitcoin, is that of custody. Many traditional assets are insured or are supported either by the state or other large institutions. These companies can be sure that their shares of stocks is highly unlikely, or stolen to be hacked, but in the case of crypto-currencies is a whole other story.
For the average User that keeps a certain amount of money in Bitcoin, a simple Hardware Wallet with a few Backups to keep the Coins safe. A great Institution, which holds millions of dollars in crypto-currencies, but it requires significant security measures to ensure that your funds are secure.
Companies like Coinbase and others have already started developing appropriate solutions. Coinbase could sometimes retract a weekly basis, millions of dollars of customer deposits. The depot problem remains an issue for institutional investors.
2. Problems with the technology
Bitcoin relies almost exclusively on Layer 2 technologies, to scale the network. Layer 2 technology such as the Lightning Network, and the Liquid Network of the block stream to allow transactions outside of the Chain and relieve pressure on the main Blockchain.
These technologies, however, have problems – and you could win in the last eighteen months. The Lightning Network is about to stagnate for six months – no matter which metric you look at. The number of Nodes is increased since April and currently stands at just under six thousand.
The total number of channels, the total capacity of the network and the average channel capacity has also decreased since April. After the network had achieved with 1,000 BTC-capacities to a new high, fell to its capacity further, up to 818 BTC, where it stands today.
Without a working scale-up solution, many investors are likely to be concerned about Bitcoins future and about whether or not the leading crypto-currency can compete ability ever with payment providers such as Visa.
3. General sentiment in the Bitcoin market
Add to all of the problems that Bitcoin currently face, yet the aspect of the market sentiment. Apparently there are just not enough Hype around Bitcoin to take part in the direction of $ 10,000.
During the Bitcoin price increase of 13,800 $ at the beginning of June, many in the industry were confident that the “crypto-Winter” is officially over. Since this year’s peak is the leading crypto-currency is in a downward spiral, as the bears push the dynamics from the market.
As Bitcoin reached originally $ 20,000, was gone, the Hype surrounding crypto-currencies off the Charts. BTC seemed to be in the Mainstream reaches, and numerous Non-technology-investors rushed to invest in the “new big thing”.
“Crypto” was discussed on several news channels and made for countless headlines, the stock exchanges saw millions of new signups. Now the fever seems to be the crypto to be the markets disappeared.
It’s not happening a lot, which would lead to a further massive increase in investors. We have to wait and see what it creates next to bring a new wave of investors in the crypto space.