Bitcoin is following the same pattern that has a number of times in the past, experts say.
SThe enthusiasts of the African cryptocurrency believe that the spectacular fall in the value of Bitcoin, the most popular digital currency, is the story that is repeated, and the price will rise again at any time.
This is because the price of Bitcoin has hit the lowest level this year, which saw it trading at less than $ 4,000. At the start of the year, the price had stabilized at around $ 6. 500. At its peak in December of last year, the value of Bitcoin has risen enormously $ 20,000.
At the time of publication, Bitcoin had emerged from the confusion under $ 4,000 to trade for $ 4 165.
Overall, the world's leading crypto-currency fell more than 80% from its climax last year. During the fall, Bitcoin did not go down alone, as he also dragged his peers like Ripple and Ethereum to the ground.
The South African Revenue Service has indicated that it is trying to track and tax Bitcoin operations. The revenue authority will clarify the tax implications of the transaction in cryptocurrencies like Bitcoin in a note of interpretation or practice at the beginning of next year.
For Petri Redelinghuys, trader and founder of Herenya Capital Advisors, Bitcoin who has recovered 80% is something that was expected.
"We are still at the beginning of Bitcoin's discovery of the utility, I think Bitcoin is following the same pattern that has been repeated a number of times in the past, based on a repeated bubble-like movement.
"If I think back to the last time Bitcoin got together at 10,000% and then crashed at 80%, it was picked up by the mainstream media, everyone got excited and got in. It gathered for $ 1. 200 and then the bubble burst because the only people who bought were speculators ".
Redelinghuys notes that after the collapse of 80%, many miners have left the game and for a period of one year (second year after the peak of $ 1 200), are substantially traded sideways to halve the mining premium of blockchain.
Now, with fewer minors around and a lower supply on the market, prices have naturally started to go higher (in the third year after the peak) until the fourth year after the peak of the previous maximum of $ 1 200, at that point the mainstream media once again took over it and the price exploded at $ 20 000, he says.
"I think we are seeing the same pattern emerge now, and we will see massive fluctuations in price (some standard deviations around a parabolic average) until it settles at fair value in 2040. Each fluctuation will be slightly smaller on the upside, but will give a decline 70% to 90% I also think that these price fluctuations will coincide with the mining reward that is halved every four years ".
Farzam Ehsani, co-founder and CEO of VALR.com, notes that Bitcoin has been very volatile and will remain there for the foreseeable future.
"This is a function of speculation, which is planned for the phase in which we find ourselves, and does not reflect the underlying fundamentals of the crypto-currency world."
Ehsani also stresses that it is important to note that the bitcoin has lost more than 80% of the price three times in the past and has returned strongly after each bear market.
"If you look at the fundamentals, there's an unprecedented number of developers involved in this space, as well as a great deal of investment for the projects being built, including ours on VALR.com.
"The institutions have also recently clarified their intention to enter the world of cryptocurrency: just as the sharp rise in prices last year did not mean that Bitcoin was taking control of our financial system, so even this collapse does not imply that Bitcoin is She is dying. "
He adds that it is clear that towards the end of last year, Bitcoin was overbought, with a lot of retail money entering the ecosystem for fear of losing.
"With the rapid rise in price, traders have taken profits, lowering prices, positions with financial leverage would have been closed, pushing the price lower and this trend has continued while the bull market has lost ground. $ 6,500 brand, however, a couple of weeks ago, there was a fork in the crypto-currency Bitcoin Cash (a cryptocurrency separate from Bitcoin, despite the similarity of the names) that juxtaposed two communities the one against the other ".
He noted that this led to a sell-off in cryptocurrency as these two communities needed to liquidate some of their holdings to support the respective versions of the Bitcoin Cash fork. This trigger caused a further sell-off as traders were unsure about the implications of the Bitcoin Cash division, Ehsani says.
Alan Robertson, co-founder of YOU #, says there are several theories for falling Bitcoin prices, but no one can say for sure.
These range from commercial robots that initiate purchase or sales orders that are followed by merchants who then start a domino effect, up to "whales" (big cryptocurrency owners) who make huge exchanges, he says.
"It could also be that, due to the nature of crypto-currencies, many holders around the world are investors for the first time that, unaccustomed to the markets, they act more easily and essentially react in an exaggerated way, exactly what has happened. # 39; last year when he reached the peak ".
Robertson urges Bitcoin investors to be patient while all investment classes go up and down.
"Consider the volatility of share prices: a recent Sasfin list of South African companies has examined the current prices of the shares and compared them with the maximum of five years. The list highlighted some spectacular falls: Aveng (-99%), Group 5 (-99%), Steinhoff (-98%), Ascendis Health (-85%) and Brait (-81%).
"You will also find companies like MTN (-67%) and Woolworths (-50%) that are losing enormous value, some of the other South African shares have shrunk from the highs of the last five years.% Since 2011, while bitcoin over the same period increased by 118 000%. "
He believes that the interest in cryptocurrencies is too closely linked to the fact that the price is growing.
"Suggests that there is still a fairly deep appreciation of how basic technology is going to free the world from banking systems that charge us billions of taxes and then let us down, from governments and central authorities that control the 39; money supply and way too much of our life, "concludes Robertson.