Bitcoin fell by 6.79% against the US dollar yesterday, closing the session at the 53,264.0 level and giving up all its gains from the previous session. Since the beginning of the week, Bitcoin has lost about 4.09% against the US dollar, relinquishing some of the gains it made last week.
Bitcoin has been suffering from strong volatility, mainly due to fears against potential regulation efforts from different governments. According to sources, the local government of Beijing is currently checking on data centers that are involved in Bitcoin mining with the purpose of understanding the impact of this activity on energy consumption.
Just like the Chinese government, some other governments have expressed their concerns about cryptocurrencies, in many cases linking them to illegal activities. India is now considering banning them, favoring a local alternative, while there is a rumor that the United States Treasury Department is investigating several financial institutions that are suspected of using cryptocurrencies to do money laundering.
Despite the recent adoption of this currency by traditional financial institutions, it's still not clear whether Bitcoin will end up becoming an acceptable alternative currency.
Recently, the CEO of JPMorgan expressed skepticism regarding Bitcoin, even though JP Morgan Chase has announced in the past that it was willing to offer Bitcoin alternatives, and most recently signaled plans to offer a managed Bitcoin fund to clients.
"I don’t care about Bitcoin. I have no interest in it,” commented JP Morgan CEO Jamie Dimon. “On the other hand, clients are interested, and I don’t tell clients what to do.”
Despite the criticism, some Bitcoin enthusiasts believe that, eventually, it will become a solid alternative to traditional currencies.
However, taking into account that Bitcoin fails as a medium of exchange and as a store of value, it's not clear whether this will happen soon or if it's even feasible.
Dimon commented that even though Blockchain is a real technology that can be used, a currency needs to be supported by a taxing authority of a country, a central bank and the rule of law.
In any case, the enthusiasm for Bitcoin and other crypto alternatives continues to be prominent in the market and more volatility is expected in the future. Adoption by traditional financial institutions is also expected to expand, especially now that asset manager Stone Ridge and Fidelity National Information Services are working on enabling US banks to offer Bitcoin to their retail investors.
By 12:41 GMT, Bitcoin went down by 0.99% against the US dollar, hitting the 55,438.0 level.