Earlier this week, two leading news publications Zerohedge and The Street reported that the Bitcoin price “plunged” as a result of the UK government and European central bank’s imposition of a strict regulatory framework on Bitcoin.
Less than eight percent of Bitcoin market
The European Bitcoin exchange market accounts for less than eight percent of the global Bitcoin market and trades. The UK market accounts for a small fraction of that, less than one percent of the global Bitcoin market.
A Zerohedge report released on Dec. 3 claimed that a sudden Bitcoin price plunge from $12,000 to $10,600 occurred because the UK government released its plans to regulate Bitcoin exchanges and impose strict Know Your Customer (KYC) and Anti-Money Laundering (AML) policies.
However, while the report was not entirely inaccurate given that the Bitcoin price did experience a minor correction, it was highly unlikely that the UK government’s announcement on a new Bitcoin regulation caused the price of Bitcoin to plunge. It was more likely that the market briefly panicked, given that Bitcoin price increased exponentially over the past two weeks, without several major corrections.
More importantly, Bitcoin price was actually up five percent, and hence a “plunge” in value did not occur. Also, it is not possible for the UK Bitcoin market to trigger a plunge or any type of major decline in Bitcoin price because it only accounts for less than one percent of the global market. A small fraction of any market cannot force it to plunge in value.
Another report from a major news publication The Street claimed that Bitcoin price decreased from $11,000 to $9,500 because a former European Central Bank official called Bitcoin a scam. However, it is evident that the short-term price trend of Bitcoin was not affected by a statement of a former ECB official. It was rather a correction after Bitcoin price achieved a new all-time high. Thus, the Bitcoin market was merely stabilizing after a spike in volume and demand.
Mainstream media wants to justify Bitcoin price movement like stocks
The fundamental issue with the approach of mainstream media is that the media outlets tend to explain every price movement of Bitcoin with the same method of evaluating the price trend of stocks.
This approach is used in providing coverage on Bitcoin for the vast majority of news publications –apart from a select few such as Forbes that have created cryptocurrency market-specific departments.
The Bitcoin market has already evolved into a nearly $200 bln market. While the value of Bitcoin is often moved or influenced by events within the sector, most of the time, Bitcoin price is unaffected by commentary from the traditional finance industry.