Bitcoin is the most popular cryptocurrency, and lately, it has been in the top headlines due to its rapid price fluctuations. Bitcoin plunged over 30% after the announcement made by the China Banking Association that its related banks will not use digital currencies anymore. The decline continued further, and bitcoin’s price fell 10% more after that.
According to some reports, the world’s biggest cryptocurrency faced a decline of $70 million in its market and that too in less than 24 hours. Bitcoin reached its all-time high, $64800 in April, and after that, it has been declining continuously and lost over 38% in market value.
If you want to make some money, you can visit Push Money and trade bitcoins. China’s announcement is the latest update that affected the bitcoin market adversely. Earlier, few tweets by the Tesla boss Elon Musk shook the bitcoin market and made its price fell drastically.
What happened to the bitcoin market?
Bitcoin is still the most valuable cryptocurrency in the market, and its value dropped a lot after the Chinese Banking Association warned its banks and advised them to be careful while using cryptocurrencies on 19th May. The high price volatility of bitcoin was the primary reason behind the warning given by the Chinese banking association.
It obviously had a massive impact on the price of bitcoin, but along with that, the price of other cryptocurrencies also fell by 7% to 20%. It is common to see some rapid fluctuations in bitcoin’s value, but on 19th May, the price fluctuation value for over $20000 was quite massive.
It made a lot of investors suffer huge financial losses. It is quite surprising that the cryptocurrency that almost touched $65000 in the month of April was at $29000 on the last trading day.
Is Elon Musk responsible for the market fluctuations?
Elon Musk is a name that is trending along with the news of bloodbath in bitcoin. Most people are confused if Elon Musk has played a role in the downfall of bitcoin, and the truth is that he has played a massive part. In February 2020, Elon Musk tweeted that his Electric car company, Tesla has purchase bitcoins of over $1.5 billion. It boosted the demand for bitcoins in the market, and its price skyrocketed.
But in May, Musk took a U-turn, and he announced that Tesla would not long be accepting bitcoin as it causes a lot of environmental damage. It made most of the investor panic, and they pulled out of bitcoin, which brought its value under $50000. After that, bitcoin investors thought that Tesla would surely sell away all its bitcoin holdings, but to everyone’s shock, Elon Musk made it clear that the company will hold its bitcoin investment, and there is no plan to sell it.
Companies confused about bitcoins
There is a lot of confusion about bitcoins, and most of the investors, institutions and traders are confused if they should use them or not. Initially, it was expected that digital currency would soon replace fiat currency, but it has not been possible till now.
There are several financial institutions and banks supporting and using cryptocurrencies, but there are also many of them who are trying to avoid it as much as possible and are also advising others to stop the use of cryptocurrencies like bitcoin due to their high price volatility. The top bank officials don’t prefer bitcoins at all as they are highly volatile, which removes their store value. There is no use of a currency if it doesn’t offer store value to the users.
Can the bitcoin market collapse damage the economy?
Crashes and fluctuations in the cryptocurrency market are common, which is why experts are not much worried about that. But the thing that makes them worry is that bitcoin sell-off can cause massive damage to the overall financial system. The governments are pretty concerned about the impact of bitcoins on the economy, which is the primary reason they are avoiding it.
It is irrefutable that bitcoin is highly volatile, but still, the risk related to them is less as it has minimum acceptance in the mainstream. Bitcoin is still not used as commonly as fiat currencies are used, and the institutions still don’t have enough exposure to crypto instruments which offers them some protection against the high price volatility.
