For the first time since January, the world’s most popular cryptocurrency, Bitcoin, dropped to its lowest level of $29,002 in June. The digital currency’s volatility is evident because it hit a record high value of $64,000 in April.
Cryptocurrency performed tremendously in 2020 despite the peak of the COVID-19 pandemic with a growth rate of more than 300%. However, following Bitcoin’s crash, other cryptocurrencies like Ethereum and Dogecoin followed suit and experienced significant downfalls.
This blog has compiled the reasons behind the sudden fall in the value of Bitcoin.
What’s Dropping the Bitcoin Value?
Digital currency was introduced in 2009. It has been operating well due to the mainstream interests of the major financial players. However, two recent global events impacted the business of crypto negatively.
After Tesla announced accepting cryptocurrency for buying their vehicles, Elon Musk refuted his statement. He said that Tesla would no longer be accepting cryptocurrencies due to their environmental effects on fossil fuels.
The world’s biggest crypto trading market, China, also imposed a ban on crypto miners and the country experienced a mass exodus of them, relocating to other places. The government also forbade financial institutions to facilitate crypto transactions.
Can We Expect a Crypto Winter?
The consistent low levels in the value of cryptocurrencies lead to a crypto winter. Many speculators have proclaimed that the cryptocurrency’s end has begun after it hit the lowest level in May.
However, many financial analysts believe that the likelihood of a crypto winter is relatively low and that the volatility will adjust itself in due course. Cryptocurrency has strong fundamentals and enjoys high exposure from pension funds, wealth managers, hedge funds, etc. It’s just a bad event that the digital currency will overcome as it has done in the past years.
Is Cryptocurrency the Right Investment for You?
If you invest for the first time, proceed with caution. “Don’t put all your eggs in one basket because cryptocurrency’s volatility can make you lose all,” an investor said. Additionally, wealth managers also don’t recommend this form of investment to amateur investors.
Bitcoin has witnessed a volatile history. It started with $13 in 2013, hitting $1,000 by the year-end. By 2017, the cryptocurrency has climbed to $20,000 before plummeting to $3,000 the same year. And this year, the bullish start of $64,000 has experienced a massive downfall.
However, many people have become millionaires from crypto investments. So, if you can take high risks while practicing caution, we give you a green signal.
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