10.23.2017

The real reason for Bitcoin's $6000 spike, and soon crash

Bitcoin's price has been hovering around $6000 for the last week or two.  No one is quite sure why it has risen so much especially after China, bitcoin's biggest exporter, has been banning coin sales.

Well to me it just became obvious.  It is just supply and demand.

Since China is bitcoins biggest supplier, now their country is banning them from selling their bitcoins.  So as of now the Chinese miners are still mining away but they can't sell their coins.  This means there is a supply shortage of bitcoin in the market.  What happens when there is a supply shortage?  The price goes up.

The problem with this is that if the chinese miners are being blocked from selling their coins, eventually they are just going to shut down operations. While this is great for the small scale bitcoin miner to become competitive, China has all the mining power and if they stop mining then bitcoin transactions would slow down to a crawl.  Already bitcoin transactions take hours or even days to complete, with china's hashing power stopped all transactions would slow to a crawl, mabye up to a month backlog.  Transaction fees would also skyrocket spooking bitcoin investors.  If their bitcoin assets suddenly become non-liquid - they can't trade their bitcoin - people will dump whatever they have and bitcoin will crash.

Eventually bitcoin will correct itself I am estimating down to $300 and just be one of the gang with all the other crypto's.

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