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How the recent ICO Bans could help boost Bitcoin’s value

 

With the recent bans on ICOs many people are left to speculate as to how it will effect Bitcoin’s price. There’s a decent chance that it could help boost Bitcoin’s price…

 China’s recent ban on ICOs really caught a lot of people off guard. Then, just the other day, Thailand’s government announced that they would be heavily regulating ICOs. Bitcoin dropped by about 11 percent, and if more countries start to follow suit this could begin the end of ICOs (at least as they are known now); but what could this mean for Bitcoin?

Before we get started I should probably explain what an ICO is for those who don’t know.

An ICO is short for “Initial Coin Offering,” and is generally used to sell off a number of coins in exchange for Bitcoin or Fiat in order to fund a project. While there are many legitimate projects that fund themselves with ICOs there are also plenty of ICO scams. Some people have praised China’s decision, while others really hate it. I’ll leave it up to you to decide whether you think it’s good or not.

Now, when China banned ICOs Bitcoin’s price dropped 11 percent (Bitcoin is not effected by this ban, it was just worried investors panic selling).While many people are expecting that further bans would also hurt Bitcoin’s price; I’m going to offer a different, more long term perspective.

Bitcoin Price drop

Source: Coinmarketcap.com

 

See the in the photo above where it says “BTC Dominance 47.9%,” that means that Bitcoin holds 47.9% of the value of all cryptocurrencies combined. Now think about how many altcoins are actually useful. Other than a few coins like Ethereum and Monero, very few coins have any sort of value or real world use other than as speculation. Right now the market is “bloated” by all of the altcoins that rise and inevitably fall (at least most of them), taking away value from Bitcoin as people sell their BTC to buy into altcoins. ICOs are used to start altcoins, and as investors hear about more and more about ICOs being banned they have less faith in the altcoins and will be more likely stay in Bitcoin, increasing it’s value. This would help contribute to a more stable Bitcoin, as well as helping to increase Bitcoin’s value.

In summary: while the recent ban on ICOs bans hurt altcoins and hurt Bitcoin in the short run, if governments do continue to crack down on ICOs then it may help consolidate value to Bitcoin.

 

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