After China and Elon Musk, the Tesla CEO pushed risks associated with digital currencies
The Cryptocurrency had built a firm grip in the stock industry and won the confidence of adopters as the perfect means of protecting revolutionary riches and safeguarding portfolios after reaching an all-time peak. The rising popularity of Bitcoin has had a significant impact on its price.
However, the price of the notoriously volatile digital currency dropped nearly 30 per cent on Wednesday. Even if the drop slowed to less than 10 percent in the afternoon, Bitcoin's market cap had dropped by around $70 billion in just 24 hours. It is now on the rise, but it is still fluctuating.
What is causing the Bitcoin price to plummet?
China’s digital asset cutdown
Its latest slump can't be attributed to a particular incident or piece of news, but rather to anxiety, confusion, and scepticism, or FUD, as crypto traders call it. Fears were focused, at least in part, on China's digital-asset strategy. According to reports, China is cracking down on digital properties. These stories aren't new to seasoned crypto investors.
After the China Banking Association cautioned member banks about the dangers associated with digital currencies, the price of the notoriously volatile digital currency dropped nearly 30 per cent at one point. Even if the drop slowed to less than 10 percent in the afternoon, Bitcoin's market cap had dropped by around $70 billion in just 24 hours.
Elon Musk’s Sudden Turndown
The China alert was just the most recent stumbling block: Before Wednesday, Bitcoin had been under pressure due to Tesla's decision not to recognise the digital currency as payment for cars after previously stating that it would, as well as rumours in Washington about stricter enforcement of digital currencies. In 2021, the price is already up around 31 percent from a year earlier, and almost 300 per cent from a year ago.
The crypto complex has also been blamed on Elon Musk. He announced earlier this month that Bitcoin will no longer be accepted as a form of payment at Tesla TSLA, -2.49 per cent before the cryptocurrency becomes more environmentally friendly. Musk was one of the main causes for the increasing trend in cryptocurrency in particular, with his tweets endorsing the uptrend in meme coin Dogecoin and Bitcoin.
What to expect?
Regulators are unconcerned over a potential crash in digital currency causing the rest of the banking sector or economy to collapse. Digital currencies have a market value of around $1.72 trillion, according to the website coinmarketcap.com, despite the recent sell-off. The price of Bitcoin has dropped dramatically from its all-time high, but this is common in many unpredictable markets, including crypto, particularly after such a big rally. ‘These moves are mostly the fault of short-term buyers. These lower rates can be seen as a purchasing opportunity for long-term investment buyers’, says experts.