Understanding Bitcoin’s latest crash: What really happened?
On Wednesday, May 19, 2021, the entire crypto market was thrown into a sea of red, with several digital assets recording double-digit losses. dropped to a low of $30,200 after months of trading around $50k, representing a dip of over 50 percent from its all-time high of $64k. Other top cryptocurrencies, including , BNB, and others, lost as much as 30 percent of their value within 24 hours.
Although the market appeared to have bounced back after Bitcoin reclaimed $40k yesterday, the flagship currency has dropped to $37,000 on news that China was clamping down on mining activities.
Several analysts have weighed in on the market correction, as well as how Bitcoin might be primed for a natural price recovery. Here’s a quick rundown on the events that triggered the latest retracement.
Let’s blame Elon MuskTo be fair to Musk, the current dip cannot be pegged to a single event or news. However, it all started with the CEO’s bearish tweets about Bitcoin about a week ago. As reported by BTC PEERS, Musk recently announced that Bitcoin would no longer be used as payment at his electric-car company Tesla (NASDAQ:), citing environmental concerns.
It is hard to ignore that Musk has been quite instrumental to the crypto market uptrend. His open endorsements of Bitcoin and meme coin DOGE have sent both digital assets soaring in the past. Recall that Bitcoin climbed to $43k on an announcement that Tesla had purchased $1.5 billion worth of Bitcoin back in February. Similarly, the price of Dogecoin reacted positively to tweets from the CEO when he dubbed it “the people’s crypto.”
When Musk announced that his company was no longer accepting Bitcoin, he created fear, uncertainty, and doubt (FUD) in the market. Bitcoin immediately fell below $50k. Furthermore, there were rumors that Tesla was going to dump its Bitcoin holdings, a claim that the CEO has dismissed.
In general, the tweets of Musk were pivotal in kick-starting a market correction.
Meanwhile, analysts at JPMorgan Chase (NYSE:) have claimed that investors are now shifting their attention and money to , which coincidentally has recorded some positive numbers lately. According to the analysts:
Institutional investors appear to be shifting away from bitcoin and back into traditional gold.
China tightens leash on cryptosAway from Musk, an announcement from Chinese regulators appears to be the straw that broke the camel’s back.
Although there has been an active ban on cryptocurrencies in China since 2017, the new rules have expanded the scope of prohibited services on the premise that “virtual currencies are not supported by any real value.”
On May 18, it was disclosed that three associations operating under the Central Bank of China had issued a document stopping institutions from conducting digital currency businesses. Members of the public were also warned not to participate in any cryptocurrency business. The announcement…
Read more:Understanding Bitcoin’s latest crash: What really happened? By BTC Peers
