May 19th proved to be a bad day for cryptocurrencies as Bitcoin price took a nosedive, dropping below the $40,000 mark in just one day.
This was the first time something like this occurred since February 2021, when news of Tesla’s $1.5 billion purchase in Bitcoin surfaced. The market closed with Bitcoin price at under $40,000. Ethereum’s price came down by close to 14% at $3000, and the same trend was seen across the top 10 cryptocurrencies. Binance’s BnB and Cardano came out to be the biggest losers.
Why did Bitcoin price go down?
According to ZeroCap’s Chief Investment Officer, Jon De Wet, all of this is hype-driven.
“Look, I think it is a natural function of the market that’s really been engulfed in a lot of hype lately. You know, when you’ve got Dogecoin pumping through highs and meme coins coming out from the left, right, and center, there has to be a bit of an exit valve. And unfortunately, you tend to get that filtrating into the rest of the market as well.”
There are some huge developments from China as well in this regard. The country’s higher-ups are sending warnings to those investing in cryptos against speculative trading. They are also notifying banks & online financial institutions that any crypto-related transactions are prohibited. Groups like China Internet Finance Association also came out in support of this decision and released their official statement.
“If any clues [cryptocurrency transactions] or related issues come to knowledge, they should be reported immediately to relevant authorities so that the matter can be thoroughly probed and any assistance can be provided.”
Conflux Network’s co-founder Fan Long, thinks there’s nothing to be afraid of and that this is not the first time China is warning people about it.
“The Chinese government has made it quite clear that that they are not really happy with cryptocurrencies, their volatile nature, & the crypto market in general. And China has been consistent with its messaging and it is also very interesting. On one hand, they express their dismay over cryptos, their speculative nature, and blockchain technology. But on the other hand, they are willing to invest heavily in it.”
Is Elon Musk responsible for the Price drop?
Elon Musk and Bitcoin news go hand in hand and this instance is no different. Back in February, Tesla invested close to $1.5 billion in Bitcoin. The following month, Musk’s truly electric car company started transacting in Bitcoin. These actions, coupled with consistent support for Dogecoin led to a notable surge in Bitcoin’s price (and also other major cryptocurrencies).
However, it looks like Elon Musk’s love for crypto was short-lived after Tesla’s latest announcement. It basically says that the company will no longer allow transactions in Bitcoin. The reason? Tesla believes Bitcoin mining is not environment-friendly.
This change of stance sent Bitcoin price crumbling down to below $40,000 in just one day and many other cryptocurrencies took the brunt as well.
Do you own Bitcoin? How has its volatile nature affected your investment?
Share your thoughts in the comments section below or write to us on LinkedIn.