Bitcoin has remained to be hugely dependent on the media hype when it comes to its price ever since its inception. And the recent drop in its price from $13,000’s to $10,000’s might just be the result of the tweets by the President of the United States, Donald Trump, a few days ago.
The Republican Donald Trump recently took to Twitter sharing his perspective regarding cryptocurrencies stating:
I am not a fan of Bitcoin and other Cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air. Unregulated Crypto Assets can facilitate unlawful behavior, including drug trade and other illegal activity
Trump posed a largely dismissive stance towards the burgeoning world of cryptos, hinting at what might happen to this space in the future when it comes to the official acceptance. The volatility and uncertainty associated with bitcoin and other cryptocurrencies are too big for the world to make it a legal entity at this moment.
Bitcoin is aiming to become a global reserve currency but the acceptance has relatively been on the lower side across the globe as of yet. Official financial entities such as IMF and banks have been distant from this space. From Trump’s statements, it is suggested that it will continue to be the same for this nascent world for quite some time to come.
Bitcoin has remained to be dependent on media hype and fear of missing out (FOMO) due to the lack of any physical backing. There is no entity such as gold or oil backing and maintaining the price of bitcoin. People usually buy it based on the media hype about its bullish behavior with the hopes of gaining quick benefits monetary wise.
Speculation is what maintains the crypto’s price solely. But in order for people to trust this space in general and buy bitcoin, the presence of a positive aura is necessary. Nobody wants to delve into an uncertain space filled with lack of trust and scams. Hence, media hype plays a role in bringing people into this space. Prices usually rise with influential people support them and drop when they don’t,
The cryptocurrency world is poised against the debt-based banking system. It wants to replace the centuries-old centralized monetary system by providing a decentralized internet-based monetary framework. Due to its rebellious attitude, the crypto world has often been used by illegal factors for illegal actions such as money laundering, drug buying, etc.
Since bitcoin is a technological innovation, there are not any concrete legislative frameworks available to control its financial flows. This is one of the major reasons why big institutions and governmental bodies are holding off from using this entity as an official means of conducting financial business.
Hence, in the growing world of bitcoin, there is a loophole. Although bitcoin promises to be a global currency, it still has no apparent control over its price. One day it is seen shooting up and the very next day, it is down on its knees.
Having no physical backing is what makes bitcoin different free from inflation but it is exactly what makes it unstable. With all the revolutionary aspects that the cryptocurrency world provides, it also needs a solution to its uncertainty problem. Until issues are resolved regarding the price manipulation and volatility, it is highly unexpected bitcoin will get adoption from political entities such as Donald Trump. An apparent major loophole needs fixing.