The crypto balloon that once took Bitcoin to as high as over $1 million had a significant fall overnight on 19th May.
Bitcoin dropped to almost 22%, while Ethereum sank as low as 40. The significant loss was suffered by Dogecoin, which fell by a massive 45%. Critics had issued warnings regarding enormous fallout in the crypto world. They have been saying for weeks that the moves in cryptocurrencies were unsustainable, and a considerable selloff would lead to a significant demolition.
Bitcoin was flying as high as $65000 in April. Currently, it is down to more than 50% as compared to April data.
Tracing the Blockchain of Events
It all began and ended with Elon Musk Twitter feeds and Tesla’s announcement. Following Tesla’s 8th Feb announcement that it will now accept corporate cash as a form of payment for its vehicles, Bitcoin and other cryptocurrencies were soaring high.
Many saw it as another evolution in the crypto world. But a series of frenzy Twitter posts from Musk sent the crypto investors into shock. Following Musk’s Twitter posts criticizing the Bitcoin energy use, he announced that Tesla would no longer accept tokens as a mode of payment. He regarded the recent Bitcoin energy consumption as “insane.”
This was a significant blow to the crypto traders and investors.
Ulrik Lykke, executive director at crypto hedge fund ARK36, made a statement saying that “Realistically, it is not the first time Elon Musk’s tweets have been erratic and, frankly, wrong. The crypto markets are extremely emotionally driven, and their participants are prone to overreacting to events they perceive as negative.”
Another big announcement from the Chinese government added fuel to the prevailing situation. On Tuesday, the People’s Bank of China said that digital tokens and currencies would not be regarded as acceptable payment options. This pushed the crypto community towards a significant selloff.
“The combined impact of the global selloff, Elon Musk’s crypto reassessment, and China’s action are behind the Bitcoin price drop. Any knee-jerk reaction to China’s action should be avoided. Dow Jones and major indices are down too.” says Shivam Thakral, CEO of BuyUcoin.
Unfortunately, the selloff dominated the market when the equities were also not stable and destined to tumble down.
The consequences of these events affected cryptocurrency stocks. The crypto stocks dropped as Global Inc. was down to 5.2% in the US, and Marathon Digital Holdings Inc. slummed to 12%.
Ipek Ozkardeskaya, a senior analyst at Swissquote in Gland, made a statement on the current situation, saying, “From a technical standpoint, the indicators are flashing red. The next important support level stands near $37,000, then the $30,000 mark. There is a chance that we see a pullback to these levels and even below, at least in the short run.”
The fall in prices of major cryptocurrencies seems a little dramatic, but considering the volatile nature of crypto trading, it is not surprising. The unpredictable nature of the cryptocurrency brings with itself shocking losses just like the current scenario.