January 16, 2018

How Bitcoin Crashed

BYTradition Gold

There are dozens of cryptocurrency exchanges across the world so when you check the price at your favorite marketplace, it is not necessarily the best price.  A centralized futures exchange, on the other hand, will only have one price.  Take the Chicago Mercantile (CME) price for Bitcoin as an example.  When it traded on the first day, December 18th, it opened and had a high of $20,650 per coin.   As I type this, it has traded as low as $10,940.00 per coin.  Let’s round that up to a massive price decline of 50% in just four weeks.  That’s a crash!


How did this happen?  To be sure, Bitcoin has been weak for the last four weeks, but on January 16th there was a huge $3,000 decline.


Zerohedge reports on the events:

Overnight reports from South Korea started it; European regulator comments extended it this morning; and Shanghai “scrutiny” headlines just sparked another slam as cryptocurrencies are getting hammered today…

Traders continue to focus largely on South Korea, one of the busiest markets around the globe for cryptocurrencies, where finance minister Kim Dong-yeon said overnight that shutting down cryptocurrency exchanges is still an option, but in what appeared a backtracking from last week’s vow to crack down on bitcoin by the Justice Ministry, Kim said that measures first need “serious” discussion among ministries, holding out hope for traders that a crackdown won’t go that far. Kim said there’s irrational speculation and that rational regulation was needed.

“The finance minister made it clear they’re definitely considering banning crypto trading – and it’s probably the third-largest market,” said Neil Wilson, senior market analyst in London for online trading platform ETX Capital. “The news is hitting prices and broader sentiment, and it follows China’s move to shutter mines.”

Then Steven Maijoor, chairman of the European Securities and Markets Authority, said investors “should be prepared to lose all their money” in bitcoin, in a Bloomberg TV interview in Hong Kong. “It has an extremely volatile value, which undermines its use as a currency,” he said. “It’s also not broadly accepted.”

That was followed by warnings from Germany’s Central Bank – Joachim Wuermeling, a member of the board of Germany’s Bundesbank, has suggested that any attempt to regulate cryptocurrencies would require international cooperation. Speaking at an event in Frankfurt on Jan. 15, the director told listeners: “Effective regulation of virtual currencies would therefore only be achievable through the greatest possible international cooperation, because the regulatory power of nation states is obviously limited.”

Then China headlines hit: Shanghai Stock Exchange has taken actions including suspending shares, requiring company clarification and asking for risk disclosure against some stocks amid speculation of blockchain concept, Shanghai Securities News reports, citing the bourse.

Shanghai-listed Easysight Supply Chain Management said in filings that co. will halt trading pending checks related to blockchain concept and warned investors again that blockchain business wouldn’t have significant impact on current earnings.”


South Korea, China, and Germany are lining up against cryptocurrencies like Bitcoin.  Who is next?  Who’s next is probably YOU, if you bought Bitcoin anywhere near $20,000 because you’re now down nearly 50% in just four short weeks.  If you are investing for your retirement, do you really believe that a product like this is wise?  Your answer should be a resounding NO.


Invest in gold.  Gold is a long term trusted investment that doesn’t have nearly the type of volatility described above.  Investing in a Gold IRA makes sense, while long term investments in Bitcoin sounds like madness.