Is the Bitcoin value getting shaky for the past weeks? Here’s the possible reason why it’s happening. And what experts from Coinbase predict that could happen in the future.
On Sunday, April 18, Bloomberg reported that Bitcoin plunges its prices again. For over the past seven weeks, the cryptocurrency was facing a terrible drop after its all-time high record. The report suggests that the sudden drop might have happened after the speculation that the United States Treasury will crack down money laundering on the digital coins. Meanwhile, experts from Coinbase think that the Bitcoin drop is not ‘sudden’ at all.
Why is Bitcoin dropping?
As of Sunday, at 1:48 PM in Singapore, Bitcoin value has decreased of 8.5% with a current price of $55,689.98. Surprisingly, this was not the first price drop of Bitcoin within this month. Prior this almost 10% drop, the price already declined as much as 15.1% with only average value of $51,707.51. This was probably the highest plunge of the digital coin for this year.
Of course, since Bitcoin is the highest-valued cryptocurrency in the world, other types of crypto coins are also expected to be affected. Ethereum, for example, also dropped its value for about 8%. Why is this happening, in the first place?
First off, Tech Visibility wants to clarify that digital assets are volatile property. A lot of things– whether minor or major– can result to a shift on Bitcoin’s total value. With that in mind, this ‘sudden’ drop could have happened as people buys more Bitcoin today.
Another possible reason, based from Bloomberg, is the speculation that the US Treasury department is now looking to investigate money laundering in the digital assets’ world. We all know that Bitcoin followers were more interested in investing in cryptocurrencies due to its independence from the national bank or even the government. This rumor could have possibly resulted to a backlash for some investors.
It’s not the end of the plunge
If you have been following the trend of Bitcoin for years now, here comes a bad news for you. Coinbase, the eight-year-old, privately held, San Francisco-based startup that is a trading platform for Bitcoin and other crypto-currencies, predicts wide-range of possible scenarios could result to a bigger and continuous Bitcoin plunge for this year of 2021.
“Given the inherent unpredictability of our business […] we are providing a range of possible scenarios for full-year 2021,” the company said. “In this scenario, we assume MTUs will decrease in a corresponding manner and end 2021 at similar levels to Q4 2020.”
Based on their report, the ‘high’ probability sees that cryptocurrencies could increase more for next months to come. The ‘mid’ scenario, on the other hand, “assumes flat crypto market capitalization,” and low to moderate risks on the value.
Unfortunately, here comes the ‘low’ scenario on the report. Coinbase predicts that a “significant decrease in crypto market capitalization, similar to the decrease observed in 2018 [will happen in cryptocurrency value.” They also added, “low levels of crypto asset price volatility thereafter.”
What to do now?
Of course, there are still huge chances that the ‘low’ scenario is impossible to happen near 2021. Although, remember: cryptocurrencies are volatile, make sure to invest smarter.