What really happened From BTC peers

Understanding Bitcoin’s Latest Crash: What Really Happened?

On Wednesday, May 19, 2021, the entire crypto market was thrown into a red sea, with several digital assets posting double-digit losses. fell $ 50,000 to a low of $ 30,200 after months of trading, a decline of over 50 percent from the all-time high of $ 64,000. Other top cryptocurrencies, including BNB and others, have lost up to 30 percent of their value in 24 hours.

Although the market appears to have rebounded after Bitcoin reclaimed $ 40,000 yesterday, the flagship currency fell to $ 37,000 after it was revealed that China was cutting back on mining activities.

Several analysts have weighed the market correction as well as how Bitcoin might be prepared for a natural price rebound. Here is a brief overview of the events that triggered the last retracement.

Let’s Blame Elon Musk For This To be fair to Musk, the current decline cannot be tied to a single event or message. It all started, however, with the CEO’s bearish tweets about Bitcoin about a week ago. As reported by BTC PEERS, Musk recently announced that Bitcoin would no longer be used as currency at his electric car company Tesla (NASDAQ :), citing environmental concerns.

It’s hard to ignore that Musk was instrumental in driving the crypto market up. His open endorsements for Bitcoin and Meme Coin DOGE have both boosted digital assets in the past. Recall that bitcoin rose to $ 43,000 after Tesla bought $ 1.5 billion worth of bitcoin back in February. Similarly, Dogecoin price responded positively to tweets from the CEO when he called it “the people’s crypto”.

When Musk announced that his company was no longer accepting Bitcoin, he created Fear, Uncertainty, and Doubt (FUD) in the market. Bitcoin immediately fell below $ 50,000. Additionally, there were rumors that Tesla would be dropping its Bitcoin holdings, a claim the CEO has denied.

In general, Musk’s tweets were instrumental in initiating a market correction.

Meanwhile, JPMorgan Chase (NYSE 🙂 analysts have claimed that investors are now turning their attention and money to what happened to be seeing some positive numbers lately. According to the analysts:

Institutional investors seem to be moving away from Bitcoin and back to traditional gold. China is tightening the leash on cryptos. Musk aside, an announcement from Chinese regulators appears to be the straw that broke the camel’s back.

Although there has been an active ban on cryptocurrencies in China since 2017, the new rules have expanded the scope of prohibited services on the premise that “virtual currencies are not supported by any real value”.

On May 18, it was announced that three associations working for the Central Bank of China had issued a document preventing the institute from doing business in digital currencies. The public has also been warned not to get involved in any cryptocurrency business. The announcement implies that financial institutions and payment companies will not be allowed to provide services related to crypto transactions. These institutions are not allowed to offer their customers any services related to cryptocurrencies, including registration, trading or settlement.

Amid the negative news, the crypto market has continued to slide into “Extreme Fear”. At the time of going to press, the Crypto Fear and Greed Index had fallen to 12 from 19 the previous day and 27 a week ago.

Leverage-Fired Losses Other theories offer a glimpse into the latest market slump. Chris Keshian, a former hedge fund manager and cryptocurrency trader, provided clarity on what is happening. He explained:

The main cause of such a drastic drop in crypto prices yesterday was cascading liquidations of overfunded traders … It all started with a reasonable market correction based on the macro environment and the then crypto news FUD (China Regulations, Tesla etc), the former hedge fund manager agrees to the statement that Tesla and China regulations marked the beginning of the crash. But can the cops reclaim their territory or is this the beginning of another crypto winter?

An oversold market? Keshian goes on to say that the crypto market has become “oversold”. Michael Gu, a cryptanalyst, shares similar views. In his case, he said that “overselling was caused by heavily leveraged positions in crypto – so an initial decline created a chain reaction (longs are sold, causing prices to fall and other longs to be liquidated).”

Commenting on why Bitcoin rose to $ 40,000 yesterday after falling to $ 30,000, Keshian commented:

Of course, once those liquidations were completed, buyers came in to buy assets at these new artificially low prices, resulting in the 40% gain we have seen in the past 24 hours on another negative news from China.

Bitcoin’s future outlook Bitcoin is unlikely to get $ 60,000 back this month. Civic co-founder and CEO Vinny Lingham tweeted that the flagship cryptocurrency is likely to fluctuate between $ 40,000 and $ 50,000.

In the short term, things aren’t looking so good for Bitcoin. Similar raids and restrictions from other countries could cause the digital asset to crash even further. But, on the positive side of things, Bitcoin fanboys would argue that this is an opportunity to buy the asset for a cheap price. Avinash Shekhar, Co-CEO of India-based crypto exchange ZebPay, said:

A nearly 40% drop in Bitcoin price from its all-time high looks dramatic, but it is normal in many volatile markets, including crypto, especially after such a large rally. Such corrections are mainly due to short-term traders taking profits. Long-term value investors might see these lower prices as buying opportunities, as MicroStrategy has just done.

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