3 reasons to understand the collapse of bitcoin and why it can continue to fall

© Getty Images En febrero de 2011 el bitcoin alcanzó un valor de US$1.

In the last year the value of the bitcoin digital currency has fallen about 80%.

The electronic currency goes through one of its worst moments since it was created a decade ago. In addition, in 2018 the global cryptocurrency market lost a value equivalent to US $ 700,000.

While some analysts are talking about the explosion of a bubble, others consider that it is the volatility of a high risk market.

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Alarms began to sound on Sunday when the price of the digital currency fell below US $ 3,500.

Although in recent days the value has recovered to be slightly above US $ 4,000, the resounding fall of the last year continues to give headaches to investors.

Anyway, those who bought in 2011 to US $ 1, probably continue sleeping peacefully.

And those who sold those currencies when it reached its maximum value, of almost US $ 20,000 in December 2017, will be celebrating their earnings.

With this vortex, the cryptocurrency carousel does not seem suitable for people with heart problems.

1. Speculators panicked
"The speculators panicked," says Naeem Aslam, the main market analyst at ThinkMarkets, to BBC Mundo.

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That caused investors to start selling bitcoins, causing a drastic drop in the price of the currency.

However, Aslam warns that this type of financial panic behaviors are usually followed by increases.

"I'm not worried about this fall, because you can buy cheaper."

"I would buy even more, if the price fell below US $ 3,000, which is quite likely."

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But there are people who do not share the vision of Aslam and are withdrawing from the market.

2. The explosion of a craig bubble
The gigantic increase in the price of bitcoin last year "was undoubtedly a bubble," says Craig Erlam, senior market analyst at Oanda.

"Now we are realizing what happened, I would not be surprised to see a price fall below US $ 1,000, before it stabilizes again," he adds.

The downward trend for several months is making the idea that a value close to US $ 6,000 is a stability parameter seems less reliable, he adds.

"The inability of the price to get higher every time there is a rise, is not a good sign".

3. "Miners" disenchanted
So-called "cryptocurrency miners" (people who generate new digital currencies when their computers solve complex equations) would be losing interest in continuing to produce foreign exchange.

This hypothesis is supported by the fact that the number of machines dedicated to generate bitcoins has decreased, according to the cryptocurrency data and services company Blockchain Ltd.

The value of bitcoin is always determined by the intensity of supply and demand. And if the miners stop generating new coins, the value of the currency falls.

That causes the market to lose confidence. And if there is no confidence, people start selling even more.

"This has been a melodramatic collapse," says Charles Hayter, co-founder of CryptoCompare, to BBC World.

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On the other hand, the restrictions that have been placed on the market in some countries have probably influenced, he adds.

Those who are willing to risk the swings of the bags, have seen in the past how from one second to another the ship can be shipwrecked.

The Amazon giant knows it well, when it lost 95% of its value between December 1999 and October 2001, in the midst of the explosion of the technology companies bubble.

But in that case, the company turned the page and its executive director, Jeff Bezos, is currently the richest man in the world.

Without a doubt Amazon is Amazon, while the world of cryptocurrencies handles money that only exists virtually.

However, few experts at this stage of the game are betting on a large-scale rebound.

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BBC MUNDO https://www.bbc.com/mundo/noticias-46376535