Over the past few weeks, the cryptocurrency market slid into one of the biggest price drops since the March 2020 coronavirus crash.
Bitcoin had a 50% correction dropping the price from the $60,000 range all the way down to $30,000. Unfortunately for the rest of the market, every other coin followed Bitcoin’s lead.
This crash caused mass panic among the cryptocurrency community and had many people panic about selling their hard-earned assets. The market quickly recovered and has been trending sideways for a few days. Bitcoin’s price remains around $38,000 trying to retest the important resistance level of $40,000.
What Could Have Caused The Crash
Many technical analysts had predicted this was going to happen and claim to have been able to see it in the charts, however, many are speculating it was caused by billionaire and Tesla CEO, Elon Musk. Elon Musk is known to have caused major Bitcoin price surges in the past thanks to positive enforcement and meme posting on Twitter.
Unfortunately, his tweets have proven to cause more harm than good in the past few weeks.
On May 12th, Elon Musk posted a statement on Twitter claiming that Tesla would no longer accept Bitcoin due to the harm the mining process causes the environment.
From May 12th to May 13th, the price went down 21% in a single day. This was the beginning of the “end.”
After the first 21% decrease, many investors believed this to be a regular correction as it is not unusual to see 20-30% corrections during a bull market.
Unfortunately, that wasn’t the only crash we saw…
The next 30% decrease followed over the next few days after news of China banning Bitcoin came out.
On the bright side, China had “banned” crypto in 2013 and 2017 which ultimately did not do anything since cryptocurrency is decentralized. Any investor who has been around the crypto community for a while, would know that both 2013 and 2017 held some of the biggest crypto bull markets in history.
The veteran cryptocurrency investors were not as phased by the China banning news, however, newer investors were understandably in panic mode. This kind of news in crypto is often referred to as “FUD” meaning Fear, Uncertainty, and Doubt. FUD in crypto is very common and shakes out a lot of retail investors with false news which often has something to do with the “banning” of cryptocurrency.
Is The Bear Market Here?
The truth is, nobody can accurately predict if this is a healthy correction that will bring the market higher to the upside or if this will be the start of a long and dreaded bear market. Although many people have very strong opinions fighting for both sides, the next few weeks will be able to more accurately show what will happen for the rest of the year.
Some Cryptospace clients trade large volumes regularly to leverage market volatility, while others continue to ‘dollar cost average’ building significantly large portfolios of Bitcoin, Ethereum, Bitcoin Cash, and Litecoin with full expectation in the growth of our digital asset-based economy over the next few years.
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