Bitcoin and Other Cryptocurrencies PlungePublished May 23, 2021 by Elana K
Bitcoin and other cryptocurrencies plunged on Wednesday, May 18, following China’s crackdown on cryptocurrencies.
Bitcoin and other cryptocurrencies plunged on Wednesday, May 18, following China’s crackdown on cryptocurrencies. In the span of just 24 hours, Bitcoin dropped from $44,000 to about $30,000. Though it regained some ground to reach about $38,000, it’s a far cry away from its record-high of nearly $65,000 in April.
Following Bitcoin’s fall, Ethereum dropped to below $2000 per unit and Ether dropped to about $2,400, a 30% decrease. Dogecoin fell by 26%.
Why the Drop?
Even before Wednesday, Bitcoin had been falling steadily due to some bad press from Elon Musk, who has been vocal about his concerns regarding the cryptocurrency’s environmental impact.
But the main catalyst of its big drop was an announcement from Chinese state-funded organizations on Tuesday, in which they said that financial institutions and payment companies shouldn’t take part in crypto transactions or even offer these kinds of services to their clients. China has a record of opposing cryptocurrency and does not allow crypto trading in the Republic, so the announcement was no surprise. But it did increase the pressure levels.
The Volatile Nature of Cryptocurrency
Bitcoin’s precipitous drop has made headlines, but the nature of cryptocurrency is to be volatile. There have been similar patterns in the past when Elon Musk or another big name has said something about cryptocurrency and the market either climbed or plunged. While China doesn’t like digital trading, cryptocurrency isn’t going away.
It’s possible, however, that Bitcoin will continue to decline until it’s able to stabilize or begin its upward ascent. Even as Bitcoin experienced one of its worst drops, Ark Investment Management CEO Cathie Wood predicted that the crypto leader has the potential to reach $500,000. Time will tell.