The price of bitcoin is up 7 percent on Monday, but down 7 percent since the weekend. Week-on-week, it is down more than 20 percent, but year-on-year it is up nearly 400 percent.
The cryptocurrency market has experienced an unprecedented profitable bull over the past year. Many crypto coins have multiplied in value tens of times. Coins like Dogecoin, Shiba Inu coin have made early investors millionaires. Ethereum has shown significant growth. Bitcoin reached peak price in April, reaching $64,000 in price. However, over the past few weeks, the crypto market has been continuously going down.
The value of a lot of significantly popular coins has gone down steeply.
But what is actually happening here? Is it a correction or the beginning of a bearish run?
I’ll look over a couple of incidents that happened in the last month or so that lead to this downward run.
1. Elon and his games.
When Musk had initially announced Tesla’s investment and that Tesla will be accepting Bitcoin as payment for cars, BTC price had risen to all-time highs. Musk’s quick reversal last week to suspend Tesla bitcoin payments and the cryptocurrency’s loss of value soon after angered many bitcoin investors.
When Bitcoin falls significantly, it causes panic selling among crypto and other investors as they sell their Altcoins. Elon Musk didn’t stop there, he continued to attack Bitcoin, calling it ‘centralized’ in another one of his tweets. As the negative tweets from Elon continued, the Bitcoin kept crashing. And as of now, BTC is at approximately 40k, an almost 35% decrease in its value from the April peak price of $64,000. Other major coins have also seen a significant fall in their prices.
Many crypto investors have been calling Elon Musk a market manipulator, as many people around the world have lost millions of dollars because of his comments and Tweets. The power of his single comment on the market has the ability to shave off 5–10% at a minimum from the price of the coin/token he mentions.
However, one interesting thing that a lot of people noted was that Elon had made no comments about the holdings of Tesla in BTC (around $1.5 billion). Musk was forced to counter rumors that Tesla had sold all of its crypto holdings. He tweeted, “To clarify speculation, Tesla has not sold any bitcoin.”
In hindsight, it shows that Elon and Tesla both believe in the power of Bitcoin and cryptocurrency markets.
The growing reputation of Bitcoin as a form of “digital gold” has been the main driver behind the massive increase in institutional and retail investors over the last year.
It should, however, be noted that the crypto market crash is a common phenomenon, and the crypto markets are highly volatile. Price corrections like these happen every few months.
2. Vitalik’s donation
Vitalik had almost 50% of SHIB’s entire circulation and other so-called “dog tokens” to his Ethereum wallet. His wallet is known by many crypto followers, so several projects have opted to send a supply of their tokens to his address in the past, likely as a guerrilla marketing tactic.
He has burned 90% of his Shiba Inu coin (SHIB) holdings, an amount worth $6.7 billion. The collection of more than 410 trillion tokens was sent to a dead blockchain address. The other 10% he has sent to the India Covid relief fund, almost worth $1 Billion dollars.
Created in August 2020 by someone named Ryoshi, Shibu Inu is a joke coin or meme coin which was launched as a rival to Dogecoin, which is also a crypto coin.
Labeling itself a “DOGE killer,” SHIB has seen a price increase of nearly 900% in the last two weeks, culminating in an all-time high of $0.00003791 on May 10 and listings on major exchanges such as Binance and Huobi.
The remaining half of SHIB’s supply is locked in liquidity on decentralized finance platform Uniswap.
3. What is the future of Bitcoin? Will it ever come back to all-time high level?
Blockchain records show that a number of so-called “whales” have continued to bolster their investment by buying the price dips, while Tesla also previously stated that it would be holding any bitcoin acquired through sales as cryptocurrency rather than exchanging it to fiat currency. And many of the largest holders appear to be in it for the long haul.
In a recent webinar that I attended, hosted by the founder of Zebpay, Ajeet Khurana, pointed out that besides the volatility in crypto it is also being accepted and used by people around the world now more than ever. So, tokens like a Bitcoin which are a deflationary asset will increase in value. The value of Bitcoin will increase as more and more people accept it and also because the number of bitcoins that and be mined are limited to 21 million tokens.
While bitcoin has been one of the world’s best performing assets over the past 10 years, the cryptocurrency has had its fair share of volatility and price corrections.
It’s far too early to draw any conclusions from bitcoin’s latest drop despite 30–40% pullbacks being common pit stops across bitcoin’s various bull runs.
4. Energy Consumption of Bitcoin
Bitcoin and its energy-intensive consensus protocol “proof-of-work” has come under scrutiny for the 129 terawatt-hours it consumes annually for its network functions. To put this number into perspective, If Bitcoin were a country, it would rank 29th out of a theoretical 196, narrowly exceeding Norway’s consumption of 124 TWh.
Some other cryptocurrencies already use less energy-intensive consensus protocols, like Cardano’s proof-of-stake. With the second-largest cryptocurrency, Ethereum, also preparing to shift away from proof-of-work to proof-of-stake, this latest bitcoin drop could mark a potential decoupling in the cryptocurrency market.
In just the past two months, bitcoin’s dominance in the crypto ecosystem has fallen from over 70% to 43%.
While the panic selling seems to have finished, the next few weeks will define whether this was just another dip to buy or the beginning of a steeper decline.
Cheers.
Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://parsh9.medium.com/current-crypto-chaos-explained-be300af0e6ac?source=rss——-8—————–cryptocurrency
