When a neophyte plans to buy a ticket to the cryptocurrency circus, they should expect some wild, stomach-churning experiences. However, the previous week’s volatility was enough to cause some crypto enthusiasts to wonder whether they’ve been manipulated.
A broad cryptocurrency crash swept about $1 trillion in market value last Wednesday, May 19 一 a shocking drop from $2.5 trillion just a week earlier.
Bitcoin, which contributes to more than 40% of the global crypto industry, sank to $30,000 last week. It became the lowest drop since January. By Friday, Bitcoin somewhat recovered, to about $37,000. It’s affected by ongoing regulatory issues and still has a long way from its all-time peak of $64,000.
Volatility is inherent in the emerging cryptocurrency market. Although, the digital assets’ exponential rise in the last year attracted crowds of experts and amateurs. These crowds are looking for “easy money.” Many of these investors ride an upswing and then immediately exit. In contrary to that, when things go down they panic, exacerbating profits or losses.
What exactly happened?
The crypto market became shaky for around a week prior to the crash last Wednesday.
On May 12, bitcoin dropped 13% after Elon Musk revoked Tesla’s pledge to recognize Bitcoin as a method of payment. It cited suspicions about the crypto’s massive carbon footprint. Then, on Wednesday came the major crash, which occurred after Chinese authorities signaled a crackdown on cryptocurrency’s usage in the region.
Central bank warned the Chinese financial institutes and companies not to allow digital currencies as payment or to provide services in exchange for them. The threat of increased regulation ignited a scare, and Bitcoin collapsed before rebounding and falling off.
Also, other crypto’s fell along with Bitcoin: ETH recently lost more than 40% of its value, while Dogecoin and Binance suffered from losing 30%.
Concerns over cryptocurrency regulations
Lately, China imposed restrictions regarding crypto trading within its boundary. In 2013, officials stated that bitcoin was not a real currency and it is fictitious.
To be clear, individuals who own and sell cryptos will maintain their transactions, but major trades on the Chinese borderland were shut down. On the surface, this week’s statements merely emphasized China’s general suspicion toward digital currency. The Treasury Department now pays attention to the crypto game.
Authorities said on Thursday that any movement of digital currencies worth $10,000 or more the International Revenue Service must know about it.
“Cryptocurrency no faces a major detection problem by facilitating criminal activities, including tax evasion,” said the Treasury Department.
The Future of Cryptocurrency
This week’s unpredictable swings put crypto fans to the test. True believers often look at the brighter side of the picture.
At the start of 2020, bitcoin sold for about $7,000 per coin, which means the percentage will probably go up, even after crashing.
William Quigley, a managing director of a crypto investment said, “We all want to concentrate on day-by-day, week-by-week. However, it is not how most people purchase cryptos, or even stocks.”
Another interview in CNN Business this week, some investors said that the crash was not something unusual and it already happened before.
They already know how to deal with it and there is no way they will leave the crypto game.
Watch this video to see more about the Future of Cryptocurrency.