Polina is an undergraduate student at Belarusian State Economic University (BSEU) where she is studying at the faculty of International Business Communication for a degree specializing in Intercultural Communication. In her spare time she enjoys drawing, music and travelling.
The price of bitcoin fell to its minimum since a decrese in spring.
Bitcoin price achieved its lowest level since April 2014 following a turbulent day on September 19th. According to the CoinDesk USD Bitcoin Price Index (BPI), the price of cryptocurrency fell to $390 (€303). After floating at a mark of $400, the price then recovered to a value of $421.42.
The price of digital bitcoin has been on a downward trend since July. Fluctuations provoked debates about whether wide bitcoin adoption by merchants led to a decline of demand on bitcoin markets.
Wide adoption of by retailers means that bitcoin is being changed to fiat currency each time the transaction is realized.
Still, bitcoin entrepreneur Charlie Shrem does not think it had an impact on cryptocurrency price level and called it’s a “bearish” argument. “People constantly keep citing this as an example of constant downward pressure but it is simply not true,” he wrote in his post on Reddit and added: “BitPay and Coinbase DO NOT sell Bitcoin on exchanges.”
Raffael Danielli, who runs analysis blog Matlab Trading, sees the reason in actions by more active traders. Speaking to Coindesk, he told: “I think today was more of a technical move. Many traders probably had $450 as their lower bound exit point, and so they got out.”
In an interview to CoinDesk, Tim Swanson, author of the new book The Anatomy of a Money-like Informational Commodity, expressed another point of view: “That is what we are seeing now – it may not matter how many people are ‘buying off-chain’ or ‘off-market’ because no one wants to lose money.”
Danielli suggested that bitcoin adoption may indeed have an impact on the market.
Market observers admit that although more merchants start accepting bitcoin payments, they are not keeping the money in digital currency. They debate that there is not enough buyers on the market to absorb these bitcoins.
Danielli also suggested that the influence is measurable if compare bitcoin to litecoin. For instance, he pointed there is a difference between bitcoin and litecoin markets performance. He noted that when bitcoin decreased 7.5% on the day’s trading, litecoin had fallen only 5%.
He added: “Given that those two coins are mostly the same (professional miners, increasing difficulty, ability to short, available on many exchanges) except that bitcoin can be more easily spend relative to litecoin you could say that merchants might account for around 2.5 percentage points of today’s drop with miners and traders sharing the other 5 percentage point.”
Danielli still believes bitcoin adoption has a positive influence on digital currency price performance taking into account the declining tendency. At the same time it may be detrimental in the future.
Danielli and Swanson suggested that all factors contributed to the downward trend. “Year-over-year we are still up,” he said. “It will be interesting to see what happens around November when year-over-year might turn negative.”
According to a poll on Reddit, 28% expect bitcoin price to fall to about $350–$400 in the next weeks.