Cryptocurrencies, which had the whole world raving until very recently, have been going through a very tough period in the past few days. Bad news from Google HQ and the head of the International Monetary Fund sent prices crashing through the floor.
So what should you do now if you’ve got money tied up in cryptos like Bitcoin? We spoke to Fiona Cincotta, senior market analyst at City Index, to find out where to go from here…
What should people now do if they hold money in Bitcoin?
“Bitcoin has dropped 30% so far this year. The million-dollar question is, does it have further to fall? Looking solely at price action, on a daily chart Bitcoin trades well below its moving average indicating a strong negative momentum. $7,100 – $7,800 is a key price bracket and should the price fall below these levels then it could extend losses to $5,922, the low hit on 6 February.
“Buy, sell or hold? I would hold for the time being to see how the price action develops with regards to the aforementioned price points.”
What was really behind the latest crash in Bitcoin?
“Two key factors weighed on Bitcoin causing the latest sell-off for the cryptocurrency. Bitcoin has never been able to shake off association with money laundering and the funding of terrorism and the link was once again reinforced as head of IMF Christine Lagarde urged regulators across the globe to crack down on bitcoin for those very reasons.
“Greater regulation is not being interpreted in a positive light by the market right now. Although it is worth keeping in mind that more regulation could help the cryptocurrency go mainstream, which would in fact be beneficial for demand and therefore the price. So on this point, Bitcoin is down but not out.
“The second factor behind bitcoin’s latest crash is altogether more concerning for investors. Google has followed in Facebook’s steps by banning the ads for cryptocurrencies and initial coin offerings. In effect, these two internet giants are shunning Bitcoin, which lowers the legitimacy of the currency, which can only work against it.”
So what impact do you think Google’s decision will have?
“Not having the internet giants Google and Facebook onboard is a huge disadvantage given the importance of digital marketing. This development could slow the growth of cryptocurrencies considerably and prolong its move to the mainstream.”