IS A CRYPTO CRASH COMING?
INTRODUCTION-
The cryptocurrency market fell close to 30% on Wednesday with China regulating authorities declaring a complete ban on the use of cryptocurrencies as a medium of exchange. Major cryptocurrencies such as Bitcoin, Ethereum, Litcoin & Binance coin were majorly pulled down by that within just 24 hours.
WHY THIS HAPPENED ?
China has ordered financial institutions and major payment companies in China from providing any services related to cryptocurrency transactions and their use. China had issued such a ban in 2017 as well, but compared with the previous ban, the new rules vividly state that "crypto hold no real value".This means that cryptocurrency cannot be used for settlement and even trading.
CONSEQUENCES-
The crypto trading platform - Binance announced, as of 7 P.M IST Wednesday, Bitcoin was trading nearly 21% lower than its price 24 hours earlier at $30,001(Lowest in the last 3 months). Another popular cryptocurrency Ethereum was down 25% at $2,453.15 while Binance Coin or BNB was down almost 31% at $353.12.This was a result of investors pulling their profits out and the $600 billion worth of crypto sellout.Cryptocurrency-linked stocks also dropped, with Coinbase Global Inc. falling 5.2% and Marathon Digital Holdings Inc. by 12%.
THE MESS-
The cryptomarket downfall did not start with just China banning but from a week ago when Elon Musk announced that Tesla won’t be accepting Bitcoin as payment, a reversal of his earlier decision. The whole point of cryptocurrency's existence was decentralization but in what sort of the idea is decentralized when a random man with just a tweet of his can push and pull the market. The real problem is that people don't hold up with the idea and the motive behind the birth of cryptocurrency!
WHAT INVESTORS SAY -
WAZIR X- "Bitcoin's fall was expected for some time because nothing goes in just one direction. Additionally, we have also seen price rising over 50 percent in a single day, so there is no need to panic."
ZEBPAY-“A nearly 40% dip in the bitcoin price from its all-time high looks dramatic but is normal in many volatile markets, including crypto, especially after such a large rally. Such corrections are mainly due to short-term traders taking profits. Long-term value investors might call these lower prices a buying opportunity. Technical analysts would call this a test of the support level around $40,000. Neither type of investor would say that tweets are the underlying cause. Investors should invest in education first. Research the underlying value of Bitcoin, Ethereum, and other crypto assets as you might look at a company’s information before buying stocks."
LEARNAPP-"For Bitcoin it has seen its fair share of falls, the worst being in 2017, that was 83 percent. It started in December 2017 and reversed by December 26, 2018."
WILL IT JUMP?
Bitcoin and crypto are inherently volatile.Major Investment Groups say that the average drawdown from a record high is close to 50%.At the top of that, bullish investors are predicting that long-term investors should review their original investment portfolio before dumping crypto holdings.
Over the course of the past 11 years, bitcoin has seen more than 750 instances where prices saw a daily change of 5% or greater, more than 230 instances in which it swung by at least 10% and nearly 50 times that it has moved by at least 20%, according to Dow Jones Market Data.So,if you are one who pose faith in cryptocurrencies hold and if you still want to dump everything,again it's up to you and only you in both the cases.
(DISCLAIMER:Don't make any investments on my statement.)
CONCLUSION-
I speculate this a short-term fall and crypto will likely reach the state where it deserves to be in.If you are new to this, stay away & Invest only with money you can afford to lose Invest and hold long term if you believe in the cause and motivation behind the birth of the cryptocurrencies and deviate from the tweet crap as much as possible.
Hope you gained some knowledge and came to know why Bitcoin,Ethereum,finance coin surged by nearly 30% in just 24 hours. and liked reading it. If you did, don't forget to like and spread this with your friends!