Bitcoins, the most speculative assets of the market have gained enormous admiration over the last decade. Recently the market has seen the worst crash of all time and according to economists, the next crash is going to be the sharpest crash the market has ever seen. The whole cryptocurrency’s value has gone down by more than 100 billion dollars since it last hit its all-time peak above $58,000. The whole market has dropped about 20% in the last week.
After the initial massive shoot-up in the graphs for bitcoins, this 20% drop was certainly not what anyone expected but with how volatile the market these pullbacks were expected. “Bitcoin has plummeted from its all-time high (ATH) of $58,350 last Sunday to today’s low of $43,189 per unit”.Citi analysts predict the price of Bitcoin at the level of $300,000 at the end of 2021.
- Earlier this year the market crashed and all the big investors and hedge funds rushed to leverage their bets (sell positions for more liquidity). And in response to that, the bitcoin market shot up. More and more investors like Micheal Saylor who owns a multi-million dollar software company, organizations like PayPal and Visa, and even the Government of Miami put their treasury into the cryptocurrency market.
- Another reason for this year’s bitcoin spike up was peculiarly Elon Musk, the CEO of Tesla and one of the Richest Man in the whole world. He tweeted in support of the cryptocurrency and also invested bitcoins the past few weeks. Elon Musk’s Tesla had invested $1.5 billion in Bitcoin and it made the company’s value jump off above almost one trillion dollars and also made the cryptocurrency market boost up to its all-time high.
- Elon invested for a reason that Tesla was losing millions of dollars per year because of the current inflation and he wanted to retrieve this money and rather put it into something more liquid something which will benefit the company in near future.
Reasons behind Bitcoin Crash:
As mentioned above the cryptocurrency market dropped about 20%. Reasons for the crash:
- Funding Stress: When the market crash all investors and traders are looking for leveraging their positions and even though bitcoins are highly speculative they’re considered a safe haven. More and more investments overheated the market and eventually, the market went downwards.
- Government: Recently Janet Yellen, US treasury secretary and former chairman of the federal reserve spoke about bitcoins, she said that a high percentage of bitcoins are used for criminal/illegal activities which according to many is false and one shall agree as most of the investors of bitcoin are major brokerages and multi-million, well-reputed organizations and individuals thus, making the transactions legal for the most percentage.
Further, she added that bitcoins are not efficient and thus, people backed out from investing in the cryptocurrency because someone like Janet holds a lot of credibility and has that influence on people to make them listen.
Even though the market is bearish at the moment, with bitcoins one can never predict, they’re called the most speculative for a reason, and thus, nothing can be confirmed the market is said to be overheated since the investments just shot up in a very short period of time and now people should be a little cautious while investing looking at the decline in the past few days.
So, whatever happens in the market now totally depends on the investors themselves but one thing is for sure if there are investors like Elon Musk and Micheal Saylor in the market bitcoins will for sure have a positive outcome moreover pullbacks like this was most likely to happen anyway cause that’s how the market works.
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