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Bitcoin Price Returns Below $1,800 One Day After Almost Touching $2,000

May 12, 2017 at 19:22 by Yahia Barakah

The price of Bitcoin had a wild week as it surged to less than $20 range from the $2,000 milestone, before giving up some of its gains on Friday to return below $1,800. A number of factors contributed to the rapid rise of the virtual currency this week, including wider international legal recognition and successful activation of Segregated Witness on Litecoin, one of Bitcoin’s alternatives.

Australia joined the list of countries that legally recognize Bitcoin as money following a major announcement on May 11 that also said that the virtual currency will be exempted from taxes. The decision effectively allows businesses operating in Bitcoin to avoid paying double taxes for their activities and Bitcoin funds, which establishes a fair ecosystem for these businesses.

The decision will come into effect on July 1 and may offer Australia a chance in gaining some of its lost share of global Bitcoin trading. The Australian Bitcoin exchange market lost most of its share to other growing markets in South Korea and Japan over the past two years.

Banks within the country stopped offering banking services to Bitcoin exchanges and services to limit possible competition, which added to the effect of double taxation by the government and drove investors and traders away from Australia. Recognition of the virtual currency in Australia followed a similar decision from the Japanese government, which came into effect on April 1.

The price of Bitcoin was also stoked by a successful activation of the Segregated Witness protocol upgrade on Litecoin, which is another digital currency that uses a network similar to Bitcoin’s. The upgrade was originally developed for Bitcoin by the Bitcoin Core development team to solve the virtual currency’s scaling problem.

The activation of Segregated Witness on Litecoin, which took place on May 10, created a soft fork with no major issues so far. Segregated Witness activation will allow the development of many new features for Litecoin that would pave the way for more secure transactions and faster movement of funds. Bitcoin investors and miners are closely observing effects of the activation as a similar activation may soon happen on Bitcoin’s network.

BTC/USD traded at 1720.0 at 19:10 GMT on the Bitstamp exchange on Friday, the pair’s lowest level since May 10, after beginning the day at 1828.8. BTC/USD rose to 1888.8 on May 11, the pair’s highest level in history.

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