Home » Business » Bitcoin price forecast: Bitcoin will recover from China crackdown, predict experts | City & Business | Finance
Business

Bitcoin price forecast: Bitcoin will recover from China crackdown, predict experts | City & Business | Finance

[X]

Bitcoin’s price crashed below $3,000 on Friday for the first time in almost eight weeks, as fears over the cryptocurrency’s future prompted a sell-off. 

It comes as China launches a crackdown on bitcoin by closing local exchanges, with BTCC annoucing an end to trading by the end of the month.

JP Morgan boss Jamie Dimon also fuelled sell offs by calling the bitcoin a fraud. 

But despite the short-term price crash  – the digital currency has fallen from near $5,000 at the start of the month – bitcoin will recover, according to experts.

David Coker, Lecturer at Westminster Business School, said: “While the Chinese regulator’s crackdown in Bitcoin exchanges was not surprising – China has been trying to put a stop on capital flight for several years now – its actions simply won’t be effective for three reasons.

“First, anyone in China with a valid public key – a large numerical value that is used to encrypt data and is generated by a software program or provided by a designated authority – can still receive and sell Bitcoin. Keys are freely available for the asking. The Great Firewall of China won’t be able to block Bitcoin traffic originating on Blockchain’s decentralised network.
 
“Second, it is well known foreign travel by Chinese citizens has surged in response to the crackdowns on capital flight.

“Any Chinese citizen traveling to the United States or Western Europe can easily purchase Bitcoin at any one of several thousand public ATMs selling the cryptocurrency.
 
“Third, the history of economics teaches us capital always finds a way.

“Financial markets exist to channel capital from where it is to where it wants to go.

“Much as land yields to the flow of water, regulations restricting the free flow of capital eventually yield as well. Capital always finds a way.”

Yoni Assia, co-founder of eToro added: “Most large financial institutions are well on the road to accepting the enormous potential of blockchain technology, and many have invested significant sums in research, product development, and directly in cryptocurrencies.

“Blockchain technology and cryptocurrencies have the potential to sweep away all of today’s incumbent financial institutions.

“In the next 20 years we can expect all financial assets to move over to the blockchain.”

However, bitcoin traders have always been urged to be cautious amid the currency’s volatility.

Chris Beauchamp, chief market analyst at IG, said: “Stocks can be valued by their earnings, sales, book value or a host of other metrics.

“Bitcoin, on the other hand, is much harder to value.

“Rather than an intrinsic value, bitcoin is a story, one that latches on to the angst felt by people in the developed world.

“For now, it is tradeable, but it requires iron discipline and risk management. It is certainly not for the faint-hearted.”


Source link