Bitcoin (BTC) has enjoyed a stellar twelve months, with its price increasing from $6,690.00 on March 25th, 2020 to an impressive $52,267 on March 24th of this year.
While this represents an incredible level of annual growth, we should note that BTC crashed through the $60,000 barrier on March 14th, before slumping by nearly 14% over the course of the subsequent eleven days.
In this post, we’ll look at the recent rise of BTC and its sudden slump, while appraising the impact of regulatory proposals on the asset’s price.
The Rise and Rise of BTC
Bitcoin’s growth through 2020 seemed to highlight the asset’s relative safe haven status, thanks to the fact that it’s largely immune to macro and socioeconomic factors.
This was borne out by BTC’s trajectory during times of almost unprecedented economic tumult, as it largely mirrored the price of gold and continued to benefit from significant increases in demand as investors sought shelter in a collapsing investments market.
Prior to a recent Fed meeting in the US, chair Jerome Powell also commented that BTC is a more natural substitute for gold rather than the US dollar (USD), with this type of insight helping to change the way in which individuals perceive the market leading crypto asset.
According to Ed Moya from Oanda, this revelation had crypto traders rejoicing as the price of BTC was initially consolidated, with further news from India and their plans not to abolish blockchain innovations also supporting positive global sentiment.
These plans were confirmed by Indian finance minister Nirmala Sitharaman, who stated that the ministry doesn’t plan to abolish third-generation blockchain innovations despite its relatively harsh stance on crypto trading.
This suggests that central banks across the globe are increasingly open to integrating crypto assets into their existing fiscal models, creating hope of exponential price growth in the long-term.
So Why Is BTC on the Slide?
Of course, Fed chair Powell has also dismissed BTC and similar tokens as mainly speculative assets, this being a considerably less positive development for the wider crypto market.
Still, this alone isn’t enough to account for Bitcoin’s recent slide, which has seen the asset’s value depreciate from an all-time high of $61,000 to just $52,267 over the course of ten days.
In fact, this decline has much to do with talk of increased regulation for BTC and the wider cryptocurrency market, which naturally followed as the asset’s bull run reached new heights in Q1. Remember, precious BTC bull runs have ultimately created subsequent volatility and price crashes, so regulators appear keen to negate this risk through a raft of potential measures.
Most importantly, there would be a push to create a global standard for crypto regulation, creating a much tighter and universally applicable framework that can cross international borders.
Talk of increased regulation and oversight has undoubtedly weighed heavily on BTC, and we should expect this trend to continue indefinitely. However, while this will curb short-term price growth volatility, it could pave the way for more sustained longer-term gains and potentially enable the asset to inch further into the financial market mainstream.