The 2018 News Headlines That Helped Drive Bitcoin's Price DownBy Jack Filiba
Bitcoin’s dramatic rise last year was followed by a turbulent 2018. With governments and businesses around the globe scrambling to keep up with cryptocurrencies, Bitcoin experienced several price drops this year.
News headlines may not necessarily be the primary drivers of a cryptocurrency’s price, but there’s still a lot to be learned from the news stories that accompanied Bitcoin’s losses in 2018.
South Korea’s harsh stance on crypto (Jan 7 - Jan 12, -17.3%)
The second week of January marked a sobering moment for what had been a rally in Bitcoin’s value in the days prior. Coming off the high of Bitcoin’s highest ever valuation in December, global investors in the new year were concerned about the potential effects of strict regulation in South Korea.
Bitcoin dropped from $16,733 to around $13,850 USD between January 7 and January 12, according to BitInfoCharts. At the time, there was a looming possibility that South Korea would take widespread action against cryptocurrencies.
Several factors fueled these fears. Before news broke of a cryptocurrency ban in South Korea, the country’s regulators began inspecting the cryptocurrency dealings of six banks. This was reported in outlets such as Reuters and the Wall Street Journal, and the ongoing actions of South Korean regulators seemed to indicate harsh consequences for one of Bitcoin’s largest markets.
Continued crackdown fears (Jan 15 - Jan 17, -22.9%)
Largely related to the concerns of investors that dominated the week before, fears of harsh regulatory actions in South Korea were still very much a factor in mid-January.
According to reports at the time, the country’s Minister of Economy and Finance, Kim Dong-yeon, said banning cryptocurrency trading was a "live option,” subject to government review. News that South Korean regulators were still deciding what action to take against exchanges created an overall sense of uncertainty.
A string of worldwide investor concerns (Jan 28 - Feb 6, -41.5%)
Between January 28 and February 6, Bitcoin’s price dropped significantly. This marked the first time in 2018 that Bitcoin was valued below $7,000.
At the time, Bloomberg reported that top US market watchdogs suggested federal and state authorities work together to create a coordinated plan for cryptocurrency exchange monitoring. In doing so, they invited Congress to tighten crypto oversight in order to increase the regulatory powers of the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC).
As Craig Erlam, a senior market analyst, told Fortune at the time, “Crypto is being driven by daily negative news.”
Erlam referenced some of the events that were concerning investors, including “regulation speculation in India, South Korea, and the U.S.,” as well as “hacking, the Facebook situation, and finally the Tether story.”
The SEC makes exchanges register (Mar 5 - Mar 11, -21.4%)
In early March, Bitcoin experienced a dramatic price drop following statements from the US Securities and Exchange Commission. Bitcoin’s price decreased to around $9,000 from a previous $11,530~.
During this period, the SEC said in a statement that it was concerned cryptocurrency exchanges had the outward appearance of being SEC-registered and regulated, despite that not being the case. As a result, the SEC said it would require digital asset exchanges to register with the Commission.
As CNBC reported at the time, this statement accompanied the near-immediate drop in Bitcoin’s price and followed weeks of subpoenas issued as part of the SEC’s attempt to increase its crypto industry oversight.
Goldman Sachs “ditches” OTC trading desk plans (Sep 5 - Sep 9, -11.7%)
In September, it appeared that the major multinational investment bank Goldman Sachs had abandoned its plans to launch an over-the-counter (OTC) cryptocurrency trading desk.
Rumors about the launch of this Wall Street OTC trading desk previously fueled the belief that widespread retail investors were on the verge of being drawn into the cryptocurrency landscape, thanks to lowered barriers for entry.
However, Business Insider and other outlets reported that Goldman Sachs was tabling its plans to open a cryptocurrency trading desk. The CFO of Goldman Sachs later called this report "fake news," but Bitcoin still experienced a sharp fallat the time.
SEC announces first set of ICO penalties (Nov 18 - Nov 20, -17.8%)
While it’s impossible to know for sure if the SEC caused Bitcoin’s price drop last month, the Commission took significant action against Initial Coin Offerings (ICOs) that accompanied a price change in the days that followed.
As CNBC reported, the SEC cracked down on unregistered cryptocurrency offerings. In doing so, the Commission announced its first-ever set of civil penalties against companies that failed to appropriately register their cryptocurrency offerings.
“These are the Commission’s first cases imposing civil penalties solely for ICO securities offering registration violations,” stated the SEC’s release. “Both companies have agreed to return funds to harmed investors, register the tokens as securities, file periodic reports with the Commission, and pay penalties.”
Generally, Bitcoin's price drops can not be traced to a single influence. However, in considering the relationship between cryptocurrency news and prices in 2018, it's clear that regulatory fears had a significant impact.