Will Bitcoin Ever Bounce Back?
Overview
On June 22, the collapse of the crypto market caused the prices of many major digital currencies to fall sharply. Bitcoin, Ethereum, and other leading cryptocurrencies plummeted overnight in the recent market crash, hitting traders and investors hard. In April, these same tokens hit record highs before falling again in May/June. Three months after Tesla purchased $1.5 billion of Bitcoin, the electric car company decided not to accept it as payment for its products, thus triggering a massive price drop. Tesla CEO Elon Musk announced on Twitter that the company is changing its policy of accepting cryptocurrencies due to environmental issues related to the Bitcoin mining process. Its impact is far-reaching, with other cryptocurrencies such as Ethereum, Binance Coin, Dogecoin, XRP and Litecoin being the most affected.
Why did the crypto market crash?
After Tesla’s decision, the market has gone through a period of turbulence before China announced its crackdown on cryptocurrencies, which caused prices to plunge. China prohibits all its banks and financial institutions from providing customers with any services involving cryptocurrency, including token issuance and trading. The country’s financial institutions have also issued warnings about speculative trading. China Internet Finance Association, China Banking Association, and China Payment and Settlement Association issued a joint statement.
“Recently, cryptocurrency prices have skyrocketed and plummeted, and speculative trading of cryptocurrency has rebounded, seriously infringing on the safety of people’s property and disrupting the normal economic and financial order.”
China has since ordered a shutdown of Bitcoin mining in its Sichuan province and told banks to stop supporting crypto transactions, along with the latest series of restrictions on crypto which has made prices tumble.
How far did Bitcoin drop?
The crash saw the price of Bitcoin plummet to around $27,000 on May 19th, less than half the value from its record high of $65,000 on April 14th of this year. Its valuation was luckily boosted by the news that Tesla had bought $1.5b of Bitcoin, which in turn sent the market price of both the crypto and Tesla soaring.
This is a large reason Tesla’s decision to reverse its policy to accept Bitcoin as payment for its products sparked a downward spiral for the crypto — 21.43% down — and fellow digital currencies.
Ethereum has experienced a 35.56% drop, Binance Coin has dropped 45.20%, Dogecoin is down 35.12%, Uniswap -45.42%, and Litecoin -44.55%, according to coinmarketcap.com.
And, just as the market was showing signs of recovering, the crash on June 8th saw Bitcoin lose 10.33%, Ethereum drop 11.82%, Cardano plummet 13.15%, XRP go 11.66% and Dogecoin losing 12.32%.
Will the crypto market recover — and when?
This is the million-dollar question everyone seems to be asking. Will the crypto market recover, and how much lower are we going to see it go?
To no surprise, there are differing opinions on this and a wide range of answers to those questions so be sure to do DYOR (do your own research), but the utility of Bitcoin and other cryptocurrencies make an undeniable case that the battle is not over, and things will continue to bounce back. When? Your guess is as good as ours.
Overall, in the last year, Bitcoin has still seen its value surge over 197% according to Coinbase, even including the large crashes on May 19th and June 8th. The current price of Bitcoin and many other cryptocurrencies is nowhere near the record highs the cryptocurrency enjoyed mid-April but is still higher now than this time last year. Zooming out further, the price of Bitcoin has soared by 34,381.49% since this time in 2014.
Alexander Vasiliev, the co-founder of global payment network Mercuryo, said in an article to the Independent: “At this rate of fall, Bitcoin is likely to see support at $40,000 if the selling continues, and surviving this fundamental onslaught can set a new run that will create a new all-time high of $70,000 in the mid-to-long term.”
This however is not a shared view by Kevin Brown, a savings and investment specialist at Scottish Friendly, who opposingly warned against investing for anyone who doesn’t understand the market.
“The level of volatility means that savers who choose to invest in cryptocurrencies must be prepared to lose all their money, at least when you are at the bookies you have a real chance of understanding the outcome and probabilities if you know the horses or football.”
Undeniably, it is a universal belief that this is not the end for crypto, and for many, it is just the beginning. As we said previously DYOR before deciding to invest in any cryptocurrency, but the lower prices on crypto are allowing for a much wider range of investors to get involved before we see more growth across the board in the industry.
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