The digital currency market was met with mixed reactions of fear and excitement by investors and digital traders across the globe. It has been more excitement than disappointment for crypto traders in recent times as the prices of cryptocurrencies soar to unprecedented heights. However, as with many other assets, cryptocurrency markets come with their downsides.
In most cases, these downsides come from cryptocurrency market crashes. If you trade the crypto markets, you’ll already know that the crypto market is extremely volatile compared to other assets. That means the value of cryptocurrencies can easily fluctuate based on fundamental factors. Often than not, the world’s most popular cryptocurrency, Bitcoin, always spearheads the devaluation of the crypto market. When the value of Bitcoin increases, many coins tend to do well and vice versa.
Towards the end of 2020 and the beginning of 2021, Bitcoin and other cryptocurrencies have enjoyed an excellent run in value. This was primarily because there was a massive input of institutional investment into cryptocurrency. This started around August 2020 and continued in that trajectory till April 2021. In mid-April, Bitcoin was selling for an all-time high of over $60,000. However, the month of May hasn’t had it so easy with digital currency.
The crypto markets have not been the smiling markets since the start of May. As if a typical value reduction wasn’t enough, the value of Bitcoin and other major coins like Ether crashed by more than 25% in one day! This crash was a huge one, and as such, it took over the news and internet trends. A lot of active traders in the crypto community were at a loss. But for passive investors and traders, you may not exactly know what caused this crash. Let’s take a look at the story behind the impact.
The Origin: Elon Musk and Tesla
The cryptocurrency market value will rise or fall because of some factors. One of the contributing factors that increased the deal in the late parts of last year and early months of this year was Elon Musk, the CEO of Tesla. This year, Elon Musk took some specific interest in the cryptocurrency market, and as expected, he had a huge influence. However, the influence has turned out to be two-sided.
At first, Elon took an interest in Dogecoin when he took to Twitter to express statements like “who let the Dogs out.” That sole act increased the value of Dogecoin. Furthermore, his company, Tesla, announced that they now accept Bitcoin as a form of payment to sell their products. As you should expect, that increased the value of Bitcoin, and as a result, most traders who picked up a bitcoin trade were joyful.
After a few moments, however, Tesla took a u-turn on that decision when they stopped accepting Bitcoin as payment. This already brought down the value. But that wasn’t the end, as Elon went on to explain that they took this decision was because of his fears of Bitcoin mining. This was the beginning of the devaluation.
The Fatal Blow: China Again
Since the origination of Bitcoin, the Chinese government has had massive influence on Bitcoin trade and market trends. This time, China placed a crypto ban on financial organizations and other services. This was where the devaluation came in heavy which sent digital currencies to a slump.
The Future
As usual, cryptocurrency has proven that it’s here to stay. As a result, this dip won’t be the end. Many investors are already buying into these cryptocurrencies which in turn, increases the price of the coins. You can earn some extra income on our blockchain-based fantasy platform- Fanspel– where you can play fantasy games and earn big!
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