The value of Bitcoin started going towards a downward trend from April 13th, 2021. Bitcoin has lost around 38% of its total value at an all-time high of $64,800 in earlier months. According to Coindesk, China’s warning has come as a great surprise in addition to Tesla’s declaration about not accepting digital currencies as a form of payment for its cars, which was earlier said that it might accept. These rollercoaster swings about the digital currencies raise a question about the risk involved in investing in this type of asset. In this article, we have explained the reasons behind the falling price of Bitcoin and other cryptocurrencies.
The cryptocurrency market started to skyrocket from $6,000 in April 2020 and went to an all-time high of $60,000 this April. But, when there was a declaration from China about banning cryptocurrencies, it had caused major distress and the cryptos started to decline by 40% and stagnated at $31,000 in mid-May; which earlier that week, was trading at $55,000. Since its fall, other cryptocurrencies like Ethereum and Dogecoin have gone down by 45% and 40%.
Reasons Why the Price of Bitcoin Went Down
- Due to extreme volatility that made Bitcoin emerge as one of the topmost assets, the same has made the Bitcoin price go down by 29% at the beginning of May. As the financial regulators in China declared a ban on Bitcoin on its banks and financial institutions.
- Moreover, Bitcoin price fall can change within a short period. By the end of 2020 Bitcoin was priced under $30,000 and by mid-April 2021, it went to an all-time high of $65,000. Later the crypto price went down because of certain stipulations declared by China by clamping down on cryptocurrencies.
- One of the major reasons behind the crypto price fall is because Elon musk, his views against Bitcoin can be seen in his tweets. Earlier, Musk had declared that he will accept Bitcoin as payment and later said Bitcoin will not be accepted as payment. This announcement made the Bitcoin price go below $50,000 which set the pace for other cryptocurrencies as well.
Few Regulatory Concerns
In recent months, Bitcoin and other cryptocurrencies have come under scrutiny from regulators as they continue to grow in the financial markets. Further, China is developing its own government-run cryptocurrency and has set rules against cryptocurrencies by banning financial companies that offer services for cryptocurrency trading. In the United States, the Securities and Exchange Commission has stressed its point about consumer protection in the crypto markets.
Can We Expect Bitcoin Price to Rise Again?
Bitcoin is one of the most popular and leading cryptocurrencies and people can easily buy bitcoin in India from any cryptocurrency exchange. It is often referred to as “digital gold” and has been considered as a store of value, also as an investment option for people around the world. Even though there are market fluctuations, Bitcoin has risen time and again because people and large communities are supporting it. Due to its current state of crypto price fall, several people on Reddit are using this opportunity to buy crypto at lower rates in the Bitcoin exchange. Analysts forecast that the price of Bitcoin would reach $100,000 in the forthcoming years.
Bitcoin and other cryptocurrencies are considered as safe assets against inflation and market volatility. The prevailing current pandemic scenario and economic climate have brought about a situation for the people to hold less cash and to stay prepared for market swings. Moreover, China is not the only nation that has restricted the use of cryptocurrencies, few banks in the Middle East countries have also banned people from dealing with Bitcoins. The government needs to play a major role in regulating cryptocurrencies and offering alternative investments to safeguard people’s money.