The likelihood of crashing to zero isn’t out of context for bitcoin and other digital currencies because they don’t have any underlying value as purely speculative investments.
The increasing interest from technology and financial companies in blockchain technologies had lifted cryptocurrency prices last year. Anonymous transactions had also added to the popularity of digital currencies.
Crashing to Zero? Blame Goes on Institutional Investors and Regulatory Bodies
However, prices started plummeting at the beginning of last month. Traders blamed institutional investors and regulatory bodies for the huge selloff.
Cryptocurrencies were the center point of talks during the World Economic Forum in Davos, where global leaders, investors, and regulatory bodies, gathered to share their ideas on economic challenges.
Federal Reserve Governor Randal Quarles, who is also the U.S. central bank’s regulation chief, said “digital currencies like bitcoin could pose more serious financial stability issues if adopted widely.” The majority of leaders agreed on the need for regulating digital currencies to avoid the illegal transfer of money.
Terrible Reports Hit Crypto Traders Sentiments
Since the World Economic Forum meeting, unfavorable reports have been coming out from all parts of the world. South Korea, India, and China are taking the lead in regulating cryptocurrencies. Moreover, the majority of countries have also been warning their citizens from investments in cryptocurrencies and Initial Coin Offerings (ICO’s).
All these cynical reports plunged bitcoin price to the range of $6000 in early Asian trading today, resulting in the loss of more than $500 billion from total market capitalization.
Why Bitcoin Price Will Crash to Zero?
Nouriel Roubini, also Known as ‘Mr. Doom’, said, “As expected Bitcoin now crashes below $6000. Now the $5K handle is reached. And the US Congressional Hearing on Crypto-Scams is still a day away. HOLD nuts will hold their melting Bitcoins all the way down to ZERO while scammers and whales dump and run.”
Aside from Tether, no other coin has claimed to be backed by Dollars. Although investigations are going on against Tether for making false claims, the lack of underlying value for digital currencies could be a big threat to the price stability.
Featured Image: twitter