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Tuesday, 10 April 2018

See Why The Fall in Bitcoin Price is Negatively Affecting All Bitcoin Investment Platforms


There are lots of things to consider before setting up and running a bitcoin investment platform of which one is the price of bitcoin. Since the price of bitcoin is not stable, there is bound to be problems for bitcoin investment platforms if there is a fall in bitcoin price. Check the simple analysis below

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Imagine that 0.1 bitcoin was sold for $500 at a certain time and then the price of bitcoin suddenly drop by 50%, this means that $500 worth of bitcoin will now be 0.2. This drastically affects the investment platforms negatively, how so?

Imagine ten participants invested 0.1 bitcoin and at the time of investment, 0.1 bitcoin was worth $500. The total amount of bitcoin invested by the ten participants will be a total of 0.1 * 10 = 1 bitcoin. Asumming the investment platforms offers 100% return of investment in three weeks, these investors will be expecting a $1,000 worth of bitcoin which will be 0.2 bitcoin at the end of three weeks. The total of bitcoin to be returned in three weeks will be 0.2 * 10 = 2 bitcoin.

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Now by the end of three weeks the price of bitcoin falls by some 50% and $1000 worth of bitcoin is now worth 0.4 bitcoin. This means that at the end of three weeks, the investment platform will now be sending 0.4 * 10 = 4 bitcoin instead of the 0.2 when the price of bitcoin was high.

In reality, the investment platform will have to send more bitcoin to investors. And these bitcoins were not initially bargained for and this is bad for business. So when you see a bitcoin investment platform canceling withdrawals and upgrading their websites after a fall in bitcoin price, know that they are trying to make adjustments to pay their investors, have a little patient with them. And these investment platforms might bring new rules to checkmate the new challenges, try and be flexible with them if you trust the investment platform.

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