by Nathan McDonald, Sprott Money:
Another boom and another crash. The story of Bitcoin has been a roller coaster ride of rises and falls to say the least. Once again, people have either engaged directly in the bubble, or stood on the sidelines and watch in awe as Bitcoin has catapulted higher in recent weeks.
Yet, this was not meant to last. Once again, as it has so many times before, Bitcoin has suffered a serious setback, falling roughly 31% overnight!
The recent rise in price was almost entirely driven on the news out of China, in which capital controls have begun being imposed upon its citizens, proving once again that your money isn’t your money unless you’re holding it in your hands.
This was a bubble that some knew had a shelf life, while others were simply being blissfully ignorant of the reality surrounding the situation.
The fact of the matter is, if the Chinese government was imposing capital controls and knuckling down on its people, then why wouldn’t they take notice of those trying to escape with their money via Bitcoin?
Well, the obvious answer is now clear to all, even those who didn’t wish to see what was unfolding. The Chinese government has crashed the price of Bitcoin overnight by simply suggesting that they will begin controls on “virtual”capital.
These comments, which will likely be followed through on and cause even further pain in the price of BTC, brought the virtual currency from a high of 8,896 yuan to 6,101 yuan in one fell swoop.
This is not to say that Bitcoin does not have value, which clearly it does as I have written about numerous times in the past, and I am a fan of any competing currency, especially one that is decentralized from government meddling officials.
For the time being, history has once again repeated itself and the saga that is Bitcoin has undoubtedly made many short term traders very wealthy and others, very poor, but don’t worry, we doubt this will be the last pump and dump that we will see out of this crypto currency.