5 reasons why Bitcoin's value will decrease in 2018
What's the story
Bitcoin garnered a lot of attention last year when it started at $963.38 and reached $19,870.62 by December'17. However, in exactly one month, the currency dipped to around $10,000 as on January 18, 2018. It was only in March 2017 that Bitcoin was trading under $1,000 and given its value flux it won't be surprising if the cryptocurrency comes full circle.
Regulations
Different countries have different rules around cryptocurrencies
Seeing the surge in cryptocurrencies, countries felt the need to establish some rules around it. For example, in South Korea, cryptocurrency investors can be fined if they do not convert their virtual accounts from anonymous to real-name. Further, China has banned Initial Coin Offerings (ICOs) in the country. If country-specific regulations are stringent, they can directly affect Bitcoin's usage and consequently its price.
Value
Bitcoins reside as computer bits, have no physical presence
Industry experts associate the virtual value of Bitcoin with its real value, which is zilch. Bitcoin does not have a physical presence and hence can't be valued in the sense of traditional assets like gold. Sure, there is revenue generation online, but Bitcoin in itself doesn't do anything. Thus, it is important for it to find enough uses before its demand and value decrease.
ICO frauds
Rise of fraudulent ICOs discourage Bitcoin investors
Following Bitcoin's success, several ICOs were launched. Seeing them as an opportunity to raise huge sums of money, the practice hasn't gone unnoticed by frauds. The US Securities and Exchange Commission has already nabbed cryptocurrencies like PlexCoins and REcoin that nearly raised $15 million by running fraudulent ICOs. If ICOs continue to be fraudulent, it can affect investor loyalty and demand.
Hacking
Cases of cryptocurrency hackings are steadily increasing
In the largest case of Bitcoin theft so far, Japan-based exchange platform Mt. Gox was hacked in 2014, losing 850,000 Bitcoins. Handling over 70% of all Bitcoin transactions, it was valued at $450 million. More recently, about $400,000 worth of the cryptocurrency Stellar Lumen was stolen from its digital wallet. Such cases clearly dissuade people to invest in an insecure cyber ecosystem.
Volatility
Bitcoin is a highly volatile and unpredictable entity
Bitcoin is volatile. It was its sudden increase in value that had led to the frenzied creation of new cryptocurrencies. According to Goldman Sachs, the risks associated with owning Bitcoins are far higher than oil or gold. Even though investors are aware of what they are getting into, it is mentally tough to keep up with such volatility that can eventually dampen the demand.