Bitcoin price action shows cryptos vulnerable to commentary and governmentpolicies

Bitcoin falls to low of $2,980, down by $1,000 in week as China flexes muscles

Volatility major issue: In 3 days btc fell40% before bouncing25% off lows

BIS staterisks of cryptoscannot yet be fully assessed and saystechnology still unproven

Apple and Google developing a payment API for cryptos may give governments full oversight

Bitcoin and cryptos current volatility and exposure to governmentsunderlines gold’s safe haven status

Courtesy of CoinDesk

Even for bitcoin last week was an eventful week. The price hit a recent low of $2,980, falling 40% and recovering by nearly 25% in the space of three days.

Last week was a good example of the vulnerabilities in the cryptocurrency space to government announcements regarding the infrastructure the ecosystem.

This last year has seen unprecedented progress and development in the bitcoin and cryptoarena. From the price reaching new highs to an explosion in Initial Coin Offerings.

The fall in price by over $1,000 should serve as a reminder that markets will stumble when they try to run before they can walk. As much as early adopters like to declare bitcoin the new currency and declare is true safe haven, the last week has shown that gold is a far betterlong-term safe haven.

Government meddling

Reasons for bitcoin’s (and other cryptos’) fall last week was mainly thanks to further crackdowns on bitcoin exchanges by the Chinese government. On Thursday bitcoin fell 16% against the U.S. dollar as the Chinese announced they were closer to shutting down cryptocurrency exchanges.

This week commentators believe crypto traders have now priced in the negative news from the East, however last week’s performance was yet another example of how vulnerable bitcoin still is to government announcements.

This weekend and this morning the price has begun to recover following a report from the Bank of International Settlements.

The BIS report said central banks needed to carefully consider their approach to the cryptocurrency markets.

Central banks will have to consider not only consumer preferences for privacy and possible efficiency gains – in terms of payments, clearing and settlements – but also the risks it may entail for the financial system and the wider economy, as well as any implications for monetary policy,

For many in the crypto space this was further validation for the likes of bitcoin etc. Whilst the BIS did not give their backing to central banks’ involvement in blockchain currencies it was an acknowledgement of them and the need for the authorities to find a way to deal with them.

Risks were at the forefront of the BIS’ minds, with cyber-attacks being the most obvious cause for concern.

Some of the risks are currently hard to assess, the report stated, given how little is known about theimpact of cyber-attacks and their resilience.

This wasyet another cautionary report from a leading monetary authority. The BIS and the Chinese regulators are just the most recent bodies to publish their concerns.

We recently covered the issue of ICOs. A primary concern for many governments. ICOs are encouraging misinformed investors to jump on the tails of the crypto boom and sometimes put money into ventures that are extremely high risk .

We expect further words of warning between now and the end of the year. In the coming weeks the UAE government are also expected to issue their thoughts on cryptocurrencies.

It will be interesting to see how the volatility plays out with each new decision from higher authorities. In the mean time, the tech community may even be working with governments to make sure they are happy with the infrastructure that supports bitcoin.

Governmentswillsoon want in

Currently bitcoin and cryptocurrencies are being seen as the new tech guys, like those in Silicon Valley before them they are breaking new ground and challenging our thoughts and government policies over something we thought was long past debate.

For Silicon Valley they challenged how we communicate, for bitcoin etc its what money is and how we use it.