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The Crypto Crash: What is Next?

Crypto Crash
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The crypto crash in May 2021, is not new for long-time BTC holders. Nonetheless, noob traders have panic sold out of fear.

Bitcoin suffered from a wave of deflation since last month. The criticism regarding Bitcoin’s negative impact on the environment, China’s announcement of a ban on cryptocurrency, and multiple other negative headlines brought the value of the virtual currency down. Altcoins have also responded to the downward rally. Resultantly, the crypto market was a perfect metaphor for the red wedding from Game of Thrones on Wednesday.

The cryptocurrency market is unpredictable. The crypto investors are well aware of this fact before they get into it. However, a sudden slash in the value last week caused unease in the crypto community.

Bitcoin, the flagship cryptocurrency, went down by more than 50% of its all-time high value on May 19th. Nearly $1 trillion was gone from the crypto market with this move.

What Do Crypto Investors Think?

The famous crypto crash of 2017 brought a lot of negative energy with it. The traditional financial institutes jump to the conclusion that bitcoin was over. It was going to zero. Nevertheless, bitcoin kept some of the gains and it started going back up after roughly two and a half years.

Crypto investors are not backing off this time despite the bearish market. Many of the organizations and big investors are buying the dip. Research by Cointelegraph suggested that big investors are accumulating more cryptocurrency. MicroStrategy, the pioneer of crypto buy-in, bought additional bitcoin during the last month’s dip.

The opinion leaders in the crypto space are reminding traders again and again that the dip is temporary and bitcoin is a long-term game. Elon Musk, the whipping boy of crypto nowadays, also tweeted on the weekend that the real fight is fiat vs. crypto and he stands with the latter.

Hence, the believers in crypto are still buying the dip. It may lead to bitcoin price recovery. However, the price may fall more in the coming weaks as new traders are selling their holding out of fear.

Why Bitcoin Price Increased?

Bitcoins have been around for more than a decade now. The price of bitcoin depends on a multitude of factors. These factors include but are not limited to the following:

  1. Supply and Demand
  2. Speculative Mania
  3. Investor’s Interest
  4. Government Regulation
  5. Corporate Adoption

During 2020 and well over into 2021, the speculative mania and corporate adoption took the price of bitcoin to the sky. There was news of corporate companies buying bitcoin or starting to deal in bitcoin every other day. Consequently, bitcoin went to as high as $65K for the first time in history.

The Coronavirus pandemic also bought a new wave of interest in cryptocurrencies. People started buying crypto as a hedge against inflation. Besides, it is a great contender for the store of value with consistently increasing prices.

Also Read: Best Practices to Cash Out Bitcoin

Increasing interest in BTC meant that there were more bitcoin being purchased than mined. As a result, demand surpassed the supply.

All these factors combined contribute towards the surging bitcoin value. Along with it, the total market cap of the crypto market crossed 2 Trillion dollars.

What is Next For Crypto Market?

Crypto Industry is here to stay. There are hundreds of crypto projects supported and funded by Billions of dollars. The diamond hand-holders are not going to give up on crypto any time soon.

The bitcoin market needs high volume to recover from last month’s crypto crash. Soon, bitcoin will be back in the game. However, until then traders need to stay calm and wait for the impact of the crypto crash to be over.

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