The past week was tumultuous for bitcoin holders as the price of bitcoin temporarily collapsed to trade below the $3,000 mark for the first time in over a month. This correction was sparked after JPMorgan CEO Jamie Dimon publicly declared bitcoin a fraud and when Chinese bitcoin exchanges BTCC, ViaBTC, and Yunbi announced their closures.
China was once considered the largest market for bitcoin trading but has lost market share in 2017 when Korea and Japan started to take larger shares in trading volumes due to favorable regulations in these countries. Nonetheless, the closure of Chinese bitcoin exchanges led to crypto traders, especially in China, dumping their bitcoins in fear of a more severe price collapse. Altcoins also took a hit with several China-related coins taking a deep dive.
Jamie Dimon’s comments that bitcoin is a fraud and “not a real thing” did not help the situation. His statements may have scared newbie investors, especially in the US, into selling their bitcoin holding to take profit before the price drops further.
Interestingly, while Jamie Dimon said he would fire any of his traders who dealt in bitcoin, a JPMorgan subsidiary actually purchased 19,102 shares in the regulated Swedish Nasdaq traded bitcoin ETN (exchange-traded note), which is the equivalent of around 95 bitcoins, worth around $500,000 shortly after Dimon made his comments. Whether the bank bought the bitcoin ETN for itself or on behalf of a client is unknown.
Regardless of the bad news coming out of China and the noise coming out of the US, the price of bitcoin quickly recovered by over $700 of its intra-month lows to currently trade at around $3,500. While that may seen quite far away from its recent all-time high of $5,000, the reality is that bitcoin was trading at “only” $2,000 two months ago.
If anything, the fact that the Chinese exchange closures did not cause a steeper price drop shows how mature bitcoin has become as an asset class and that the regulatory volatile country China no longer plays such an important role regarding the price of bitcoin. This is good news for bitcoin holders who want steady long-term price growth.
Source: Cryptocurrency