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Downfall of Bitcoin

by S.K 11 months ago in bitcoin
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Downfall of Bitcoin
Photo by Bermix Studio on Unsplash

But Musk changed course a short time later and said that Tesla would no longer accept bitcoin because of possible environmental damage from bitcoin mining. As a result, Bitcoin fell below $50,000, setting the tone for a major pullback in most cryptocurrencies. These measures helped drive up the price of Bitcoin, and Musk also promoted another digital currency, Dogecoin, which was gaining in value.

Bitcoin, for example, reached $40,000 last week before falling sharply on Monday as China's central bank stepped up its crackdown on cryptocurrencies. The Central Bank said it has instructed banks and payment companies to crack down on cryptocurrency trading, including China Construction Bank and Alipay. Bitcoin fell sharply in early June amid fears it could be used in the ransomware attack on the Colonial Pipeline.

After surpassing the $64,000 mark in April, Bitcoin struggled to reach its all-time high in April after a series of events. The price of bitcoin recovered slightly after the defeat last week, but remains well below its April 13 peak of $65,000. Before Tuesday's loss, bitcoin had slipped more than 50 percent from its mid-April peak.

Bitcoin struggled against regulatory pressure and environmental concerns last week, plummeting below $40,000 per bitcoin. The extreme volatility that has characterized the emergence of Bitcoins in recent years was fully demonstrated when the price of the digital currency plummeted in a month by as much as 29%, after Chinese financial regulators banned domestic banks and other financial institutions from supporting them. The price of bitcoin, which started at more than $60,000, fell below the closely watched $50,000 mark after it was revealed that the Chinese government had doubled its crackdown on bitcoin and cryptocurrencies.

The cryptocurrency crash comes as Chinese regulators announced a crackdown on cryptocurrencies on Tuesday. Bitcoin prices stabilised on Monday after investors endured a weekend of declines in cryptocurrencies. On Wednesday, the cryptocurrency market saw the biggest price correction in major currencies such as Bitcoin, Ethereum, BNB and others, plummeting as much as 30% in 24 hours.

After soaring on a wave of investor interest at the start of the year, the cryptocurrency's share price has slumped in the past week. Sunday's bitcoin selloff extended a week-long decline after regulators in the US and China stepped up scrutiny of the sector. Since May 16, the price of 4,440.62 Bitcoins has fallen 17%, including Sunday's fall.

The latest drop is the sharpest since the rise in Bitcoin value earlier this year, when analysts worried about a potential 'blow' in the cryptocurrency market after the price had been temporarily more than doubled by early 2021. In a recent Bank of America survey from June, 81% of fund managers surveyed said Bitcoin was in a bubble. Bespoke Investment Group said the average discount from record highs on 69 trading days over the past decade was almost 50%, with bitcoin more than 40% off those record highs.

Bitcoin fell to a three-month low on Wednesday, temporarily dropping below $30,000 before falling more than 30%, continuing a week of cryptocurrency sales. The dramatic withdrawal of Bitcoin and other cryptocurrencies came amid a deluge of negative headlines, with catalysts such as Tesla CEO Elon Musk and a new round of Chinese government regulation hitting an investment sector characterized by the extreme volatility it generates. According to Dow Jones Market Data, over the last 11 years, Bitcoin has experienced more than 750 instances in which the price has changed with 5% or more every day, and more than 230 cases in which it has fluctuated between 10% and 50% and times in which it has moved above 20%.

Ether, the main coin of blockchain network Ethereum, broke through the $2,000 mark at one point before falling back. Other major tokens such as Ethereum, Binance (BNB), Cardano and viral meme-based dogecoin also crashed, dragging the crypto-currency market down by billions of dollars. The most popular cryptocurrency was Ethereum, down 2.5% to $24,53.15, while Binance Coin BNB was down 3.1% at $35,312.

While virtual currencies are in retreat, it is testing the durability of the cryptocurrency boom: the value of more than 7,000 tokens that Coingecko tracks has shrunk by more than $600 billion to $1.9 trillion in the past week. The recent slide is a reversal of a dramatic rise that began in the second half of last year. The current weakness could erase some of those losses. According to Mike McGlone, commodities strategist at Bloomberg Intelligence in New York, Bitcoin, the biggest cryptocurrency, is testing its 200-day moving average and its discounting the average of 120 days is larger than last year.

Musk's decision marked a sharp U-turn by Tesla, which began accepting bitcoin payments on its services in February 2021. The move came after the electric car maker bought bitcoin shares worth $1.5 billion (1.06 billion euros), which in turn boosted the cryptocurrency's price. It followed the recent crash Tesla triggered when it flipped to accept bitcoin as a payment for its products while China cracked down on initial coin offerings, blocked exchanges and warned against speculative trading. In a further blow, the Chinese government ordered bitcoin mining in its province of Sichuan and called on banks to stop accepting cryptotransactions, the latest wave of restrictions on cryptocurrency.

While Tesla kept its bitcoin holdings, it stopped accepting bitcoin as a means of payment, citing the widespread use of fossil fuels to mine the digital coin. Bitcoin's fortunes have deteriorated, while other cryptocurrencies have not fared so well. Ethereum, the world's largest cryptocurrency, has fallen 40 per cent, while Dogecoin, Musk's popular meme crypto, has lost 45 per cent.

Some blame Elon Musk for shaken up the market last week when he said that Tesla would not accept bitcoin as a payment means, while others attribute the sell-off to China's increasing ban on cryptocurrency banking. Musk's tweet last week announcing Tesla's fear of Bitcoin followed the stock market crash. It is up to investors to decide whether $30,000 is too low and whether they are willing to buy Bitcoin, but many have set up automatic orders to buy Bitcoin as soon as that mark is crossed.

On the wax side of $30,000, bitcoin is here to stay, Burniske said, and he will keep a close eye on the currency as it approaches its 200-day moving average of $39,800. Bitcoin was trading at that level at midday on Thursday, and while the near-term forecast for bitcoin looks uncertain, the return to $40,000 appears to be a possible boost.


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