Since the start of this year, cryptocurrency and particularly Bitcoin, has not seen any dramatic increase but a continuous decrease in the price value. Particularly in the second quarter, crypto market has gone down and the reason is the strict government and regulatory policies towards cryptocurrencies. Some governments and regulators are not accepting the crypto as a mean of payment or the alternative of fiat currencies therefore, top-ranked economists from the globe are totally against the bitcoin. Crypto market continues to decline since last week as many governments officially announced their regulations regarding the validity of cryptocurrency. All top 50 coins are in decline since last week.
This recent decline is because of the change in regulations by the government like China has long played an outstanding role in the world of cryptocurrencies, therefore it plays a very important role in the recent decent of Crypto Market.
Role of China for recent decent in crypto market
China accounted for over 90% of the world’s total trading volume in cryptocurrency last year in July, and exactly one year later, share of its global trading dropped to under 1%. The main reason behind this sudden and steep drop is that Chinese regulators issued a complete ban on trading in February 2018. Country’s central regulatory authority announced that in China all the domestic & international exchanges and ICOs will be blocked. There are other reasons, why trading was declined that the financial experts in China feared losing control over the rapidly emerging cryptocurrency market, the gain in volatility was so rapid toward the end of 2017 that they thought it will be out of their control and might collapse their existing economy. The PBOC (Peoples Bank of China) views virtual currencies as illegal, since they are not issued by any recognized monetary institution, don’t hold any legal status that can make them equivalent to money, and hence advises against their circulation as a currency.
Undoubtedly, China was one of the first nations to take dramatic action to implement the regulations of the cryptocurrency world. At this point, it remains one of the most extreme countries in terms of the severity of its regulatory action. But, although many other countries, the U.S. included, have not gone so far as to ban ICOs and cryptocurrency exchanges outright, they nonetheless may have been influenced by China’s move in this direction. The authorities grew concerned about bitcoin, potentially challenging the Yuan and taking over their economy and replacing Yuan with bitcoin due to the increased interest of Chinese investors in bitcoin. In response, they Implement a ban in order to slow down interest and restore the earlier value of Yuan. In result, the price of bitcoin fell by more than 60% early in 2018.
80% of ICOs conducted in 2017 were scams
After the governments clarified their regulations toward cryptocurrencies, it started to reveal that more than 80% of the ICOs conducted in 2017 were scams. According to a study, total funding of coins and tokens in 2017 amounted to $11.9 billion. $1.34 billion (11%) of ICO funding went to scams, the vast majority went to three large scammy projects; Pincoin ($660 million), Arisebank ($600 million), and Savedroid ($50 million), which together equal $1.31 billion. This suggests that while a large number of ICOs were scams, they received very little funding when compared with the industry as a whole.
Higher electricity rates for crypto miners in NY
The State of New York has approved a new electricity rate scheme for cryptocurrency miners that will allow them to negotiate contracts. The state of New York gave permission to 36 municipal power authorities in the state to charge crypto miners more than other consumers. The Massena’s municipal utility will introduce a new rate structure for crypto miners who are interested in conducting operations there. The utility will consider contracts on a case-by-case basis, which will protect other utility customers from increased rates. New York State Department of Public Service’s Chair, John Rhodes said;
We must ensure that business customers pay a fair price for the electricity that they consume. However, given the abundance of low-cost electricity in Upstate New York, there is an opportunity to serve the needs of existing customers and to encourage economic development in the region.
Triple electricity price for cryptocurrency miners in Canada
Canada is also home for many crypto miners. In Canada, state government of Quebec decided to triple electricity prices for cryptocurrency miners as it figures out how to manage the industry’s surge in demand. That’s even as power supplier Hydro-Quebec has courted miners to come there and take advantage of the bounty of power coming from the dams of northern Quebec.
Similarly, many other countries are changing their regulations against cryptocurrencies due to its uncertain behavior and they look at digital currency as a fraud and banks are very hesitant to treat cryptocurrency as a regular commodity.
According to BitMEX’s CEO, Arthur Hayes, this uncertainty is regulations is the primary reason of bear trend in crypto markets and the market will start showing positive response as soon there’s some regularity clarity. While talking to CNBC, he had said;
We’re one positive regulatory decision away. Maybe an ETF approved by the SEC to climbing through to $20,000 and even to $50,000 by the end of the year.