The price for the digital currency bitcoin continues to recover after suffering a massive drop last week.
The cryptocurrency fell as low as $2,951.15 on Friday, its lowest level since early August. Bitcoin’s value lost about 14.7 percent last week.
However, it has since recovered by around 32 percent and is currently trading at $3,923.13 per bitcoin, although this is still some way off its recent peak of around $4,950.
The recent fall was triggered by several factors. A number of large bitcoin exchanges in China announced plans to close by the end of the month as China cracked down on digital currencies, as well as banning any new initial coin offerings (ICOs) as a way of raising funds.
Meanwhile, JPMorgan CEO Jamie Dimon criticized bitcoin as a fraud and compared the popularity of virtual currencies to the tulip bulb mania of the 17th century. This further weighed on the price.
The reason the market for bitcoin is recovering is because investors are getting over the initial shock and realizing that China no longer dominates the market.
“The market is realizing that it doesn’t really matter what happens in China anymore, the exchanges based there no longer dominate trading activity and more mature liquidity from institutional players in Japan, Korea and Europe is providing a boost to this next bull cycle,” said Aurélien Menant, founder and CEO of Hong Kong-based token exchange Gatecoin, told CNBC via email on Monday.
“It’s also important to remember that the crackdown in China was targeting the activities of the local exchanges for not complying with the Chinese financial regulatory environment and not a crackdown on bitcoin and blockchain technologies.”
Despite the recent fall, bitcoin is still enjoying a remarkable 2017. The price for the crypto currency is up 293 percent since the start of the year.
Charles Hayter, founder of digital currency comparison website CryptoCompare, said it is still unclear whether the move by Chinese regulators will crystalize into a full, permanent ban on digital currencies.
“Earlier in the year the market was bullish whilst the Chinese exchanges were facing regulatory implementation and Japan picked up the slack,” he told CNBC via email.
“The market is moving on and realizing the price drama was excessive and overdone.”
Source: Tech CNBC
Bitcoin price bounces back by nearly ,000 as market moves on from recent drama