While bitcoin is a hot topic in tech circles, the price of bitcoin is based purely on speculation, not an underlying asset. As a result, its price can go up and down within 24 hours. This volatility is partly due to stories about the future of cryptocurrency and its regulatory risks. Other factors are the involvement of Elon Musk and the lack of regulation.
Lack of regulation
As the popularity of Bitcoin grows, governments and corporations are looking for ways to regulate this digital currency. But it’s not all about creating regulations that are too complex, which may end up hurting investors. The lack of regulation could lead to an even greater problem. As more governments consider adopting digital currencies, they need to consider the long-term effects of their use on the environment.
Despite growing government regulation, cryptocurrency values are still tied to the speculative nature of the industry. This can cause massive short-term price swings. Moreover, the industry is still young, making it difficult to measure how regulations will affect it in the long run. While some recent regulations may result in a more stable market, questions remain regarding their effectiveness.
While China’s slow growth rate is related to its crackdown on cryptos, other countries are not completely against digital currencies. The government of Japan is the world’s third-largest economy, and it recently recognized BitCoin, which directly relates to the rising demand for cryptocurrency in Asia.
The Bitcoin boom is causing controversy, and not in a good way. There is some evidence that Bitcoin is being used for illicit purposes. The Financial Crimes Enforcement Network (FinCEN), which enforces money laundering laws, has released new guidelines regarding the use of virtual currency. Under these guidelines, certain virtual currency trading entities are required to register as Money Services Businesses. While this new regulation may be a negative for the Bitcoin industry, others see it as a positive development.
Bitcoin prices have remained stable at around $1,000 over the past few months, despite being pushed down by the shutdown of Silk Road, the largest online market for illegal goods. Despite the ban, however, Bitcoin is still used by illegal enterprises, such as shady online marketplaces, and competitors have been popping up in their place. In addition to attracting more buyers, the price of Bitcoin has gained legitimacy as an investment.
Elon Musk’s interest
Elon Musk’s interest in Bitcoin isn’t entirely clear. In the beginning, the tech mogul was a supporter of cryptocurrency and was active on Twitter, but as the price dropped, he shifted his focus. While he still advocates for the currency, he has been more of an advocate of Dogecoin. He has said that Doge is people’s crypto and has met with employees of his other companies to discuss their thoughts on the cryptocurrency.
Musk is a well-known name in the cryptocurrency industry, with a Twitter following of more than 55 million. However, his relationship with cryptocurrencies has been a bit tense. He has been quoted as saying that cryptocurrencies are bad for the environment, and he has also been known to tweet about them when the market reacts. According to CoinSwitchKuber, a cryptocurrency tracking service, tweets from Elon Musk can cause a spike in trading volumes.
In May, Elon Musk announced that Tesla wouldn’t accept Bitcoin. The reason for his decision was that he was concerned about the use of fossil fuels in mining bitcoin. He claimed that if miners switched to cleaner energy, Tesla would accept bitcoin. This caused bitcoin to suffer a major correction, falling more than 10%.