On Tuesday, the 24th of September, the price of Bitcoin dropped by 18 per cent. It was the largest intraday drop in the cryptocurrency’s price since January 2018.

The price has since stabilised, but the drop could be attributed to three main factors, which have been highlighted by Marius Reitz, General Manager for Africa at a global cryptocurrency company, Luno.

These include:

1. Negative sentiments: According to Reitz, “the main reason for the drop has been the negative sentiments across all markets caused by the global geopolitical news flow”.

This, he said, has impacted all asset classes and has happened at a time of low liquidity which has led to volatility.

“When there is more liquidity and markets go risk-off there is still money going into safe haven assets, gold, yen, etc. As Luno has commented previously, these investors have often placed a small amount into Bitcoin as a hedge. But even safe havens are struggling to find buyers. Bitcoin dropped on 24 September and gold dropped on 25 September,” Reitz said.

2. The potential impact of new Bakkt exchange: There could have been a link on the 24th with the start of Bitcoin Futures trading and physical settlement on the ICE-backed Bakkt exchange.

This could have further reduced liquidity, but the downward trend was almost certainly a function of the overall market sentiment, Reitz said.

3. Volatility of new asset classes: Cryptocurrencies, like all new asset class, will always have a higher level of volatility compared with traditional trading, said Reitz.

However, as the benefits (especially to developing markets which are disadvantaged by traditional financial services systems) become clear, more people and businesses will hold the coins for their utility value. This will reduce speculation and volatility.

As regulation is introduced and the functionality of the coins increases, the true price will become more consistent.

Read more: http://www.nigeriatodaynews.com/news/3-reasons-price-of-bitcoin-dropped-by-18-in-one-day

It is typical of underdeveloped economies that they do not (or are not allowed to) concentrate on those sectors of the economy which in turn will generate growth and raise production to a new level altogether, and there are very few ties between one sector and another so that (say) agriculture and industry could react beneficially on each other.
Furthermore, whatever savings are made within the economy are mainly sent abroad or are frittered away in consumption rather than being redirected to productive purposes. Much of the national income which remains within the country goes to pay individuals who are not directly involved in producing wealth but only in rendering auxiliary services-civil servants, merchants, soldiers, entertainers, etc. What aggravates the situation is that more people are employed in those jobs than are really necessary to give efficient service; and to crown it all these people do not reinvest in agriculture or industry. They squander the wealth created by the peasants and workers by purchasing cars, whisky and perfume.

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