Why Bitcoin's Tumble Probably Doesn't Signal Its Demise

The value of Bitcoin took a 20-percent tumble over the weekend. But does this signal the end of Bitcoin? Probably not.

Why Bitcoin's Tumble Probably Doesn't Signal Its Demise
Getty Images / Lam Yik Fei

By now, you're probably familiar with the term "Bitcoin." It's a virtual currency released in 2009 that's slowly but surely become a somewhat legitimate form of payment.

But if the value of Bitcoin continues on its current path, all that work to become a recognized currency might not matter much, or at least that's what some would have you believe. 

A writer for Business Insider sums things up in a 6-sentence article that paints a not-so-pretty picture. Not only is Bitcoin doing, in all-caps "TERRIBLY," according to the writer, but he also notes "charts don't get uglier than this."

But not everyone is so quick to jump to the doom and gloom outlook. 

The New York Times takes a far more sober approach, pointing out these fluctuations in price are commonplace for the cryptocurrency. 

"Since it was introduced in 2009 by an anonymous programmer, or group of programmers, the price of Bitcoin has fluctuated unpredictably. After reaching its peak of about $1,150 late last year, the price has been in a prolonged slide."

And if we go back to that chart from BitcoinAverage, it's clear that observation holds true. In fact, in November of last year, Bitcoin's value was less than it is now. 

So what's causing this recent decline in value?

 A writer for TechCrunch suggests it might have a lot to do with Bitcoin's push to become a legitimate currency. 

"PayPal, and the like ... are not driving its price upward. This could be an argument that potential short-term increases in the volume of bitcoin transactions do not drive up its per-unit price."

And The New York Times points to that same explanation, saying more merchants accept Bitcoin. "There are more Bitcoins in circulation, which could be helping to drive down the price."

In the end, it appears the declining value of Bitcoin is more a side-effect of normal market mechanics, rather than investors selling it off and running for the hills. 

And for what it's worth, a writer for Forbes says even if Bitcoin tanks, the market will likely correct itself. That's because those collecting the coins, a practice called mining, will find less value in it. With less being mined, fewer coins will hit the market, and thus the value of Bitcoin should stabilize. 

This video includes images from Getty Images.