The cryptocurrency market has always been wild and risky. In fact, the rollercoaster and always on-the-edge feeling of the market is one of its selling points, with the way it has soared exponentially in the last year. There are fluctuations every now and then but we’ve never seen a crash like the one we saw last week. Bitcoin, the largest cryptocurrency, just fell to the lowest it has ever been this year going down 30%. Although it has since rebounded a bit, the highs it has experienced in April are very far and beyond where it is now. Other cryptocurrencies like Ethereum and the newest big player Dogecoin have also experienced this dip in their market values.
Some have said that with the trends of the market this year, this has been expected. Some even say that this is a healthy crash, one that will correct the market eventually. Others are worried however, that this is the prime example of the inherent volatility of cryptocurrencies and the way it has risen. Let us explore this market crash and look at what’s really in it for the market and for traders and investors.
What Triggered the Crash?
Intuitively, the most immediate trigger to this crash is China’s recent regulations and warnings with the use of cryptocurrency. China announced on May 18 that banks, financial and trading institutions, and companies are now banned from trading and providing cryptocurrency services. This is on the premise that based on this new regulation, cryptocurrency holds no real value. What this means is that these institutions are now barred from offering clients any service that involves cryptocurrency including, but not limited to, registration, trading, and settling. While this isn’t anything new as China has expressed this same sentiment over the last decade or so, the Central Bank has made regulations this time stricter as cryptocurrency is gaining more footing in the country.
However, experts weigh in and say that while this was the final trigger, the environment of the crypto market in the last weeks has led up to this inevitable crash. One other consideration for this is Tesla CEO and one of the most important cryptocurrency figures Elon Musk’s most recent tweet that sparked controversy and confusion. He said on his tweet that going forward, Tesla will no longer be accepting Bitcoin as payment, despite just purchasing more than a billion dollar share in Bitcoin holdings. His contradicting tweets have sparked anxiety and doubts over his plans moving forward, given the influence he and his tweets have over the market as we have seen with the way Dogecoin has risen with a few tweets.
Opportunity for Traders and Investors
It has been a tumultuous week for traders and investors, especially for crypto and bitcoin fans. Despite this increasing volatility in the market however, most experts still maintain that this is a healthy correction and is actually a good opportunity for people to join the market and buy more.
In the grand scheme of things, Bitcoin is still up to 500% to its value in 2019. It has also been slowly gaining back what it lost in the crash. In this regard, things are still looking positive for the cryptocurrency, especially for traders looking for long term investment. This must also be taken in the context of inherently volatile markets as with the cryptocurrency market. These fluctuations are expected and investors are looking at these lower prices as a golden opportunity to buy more and expand their portfolios.
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