The price of bitcoin on the CoinDesk USD Bitcoin Price Index (BPI) dropped below $500 today.
At 2.30pm UTC, the price had fallen nearly 9% to $496.27, its lowest level since 21st May, when concerns about restrictive regulation in China were widespread.
Notably, the decline below $500 was short lived, with the BPI quickly rebounding over the $500 mark to reach $512.26 at press time.
No clear cause
Though no one news event could clearly be linked to the price decline, speculation was rampant on Reddit and other bitcoin community mainstays as to what factors were contributing to the market decline.
In its most recent BitBeat report, the Wall Street Journal suggested that the recent US Consumer Financial Protection Bureau warning and Bitstamp’s announcement that it had changed banking partners were both potential factors.
Dear Bitstamp customers-please make sure you use our updated banking details when sending your transfer to Bitstamp.
— Bitstamp (@Bitstamp) August 13, 2014
However, WSJ acknowledged that uncertainty over US regulation may have also been a contributing cause.
Vytautas Karalevičius, Spectro Coin co-founder and CEO, told CoinDesk he believes all three events to be contributing factors, though he said Bitstamp might have been the most important of the three, adding:
“Bitstamp changing its bank provider from Unicredit to Raiffeisen might have two effects. Firstly, some deposits to old Unicredit account are bouncing back, so people who were willing to buy bitcoin these days do not support the demand for it. Also, it shows a potential problem [even the] most liquid exchanges face.”
Though the proposal was first introduced last month, a growing number of bitcoin’s business leaders have started moving to formally contest the proposed framework. Boston-based bitcoin startup Circle even declared yesterday it would not serve New York customers should the laws be enacted.
Speaking to CoinDesk, Shawn Sloves, CEO of global bitcoin exchange network Atlas ATS offered a different take. He suggested that overall saturating in the bitcoin exchange market remains a contributing factor. New York regulation, regardless of the form in which it passes, will be a boon for the industry, he added.
Sloves explained:
“From what I have seen, there’s a saturation point of exchanges popping up every week in different countries, and they’re creating fragmentation and turning bitcoins and digital currencies, and because of the lack of liquidity, it adds to the volatility.”
China’s markets mirror US
At press time, China’s markets had seen a similar reaction, with the price of bitcoin on the CoinDesk CNY BPI falling nearly 8% to hit ¥3,075.27.
This figure was down from an opening price of ¥3,339.58, which was also the market’s daily high.
The CoinDesk CNY BPI tracks the price of bitcoin at major China-based bitcoin exchanges such as BTC China, Huobi and OKCoin.
Optimism remains
Despite the recent price decline, bitcoin industry leaders expressed optimism in conversations with CoinDesk that the development would be little more than a speedbump on bitcoin’s road to mainstream adoption.
Payza business development consultant Charlie Shrem, for example, noted that the current price drop represents an opportunity for certain segments of the bitcoin market, saying:
“Being a ‘long term bull’, it’s a good opportunity to pick up cheap coins. For day traders, like they always say, ‘Buy low sell high.'”
Expresscoin CMO and co-founder Joseph Hsieh further emphasized the long-term value of bitcoin to CoinDesk, adding:
“If you’re a technologist, then the price is the least interesting aspect compared to bitcoin’s utility and underlying potential. The dotcom crash killed the total market valuation of internet companies, but it never killed the underlying value of the internet.”
Images via CoinDesk