Why has Bitcoin Plummeted

In the past month, Bitcoin has suffered a sharp fall of 51% in value, and traded at a low of about $ 30,000 yesterday. The currency then recovered and traded around the $ 40,000 level. The main culprits for the decline – the Chinese authorities who issued threatening statements against digital currency traders, and Elon Musk who expressed distrust in the currency.

Yesterday (Wednesday) the Bitcoin currency fell to around $ 30,000 at its most difficult time, a fall of 20% in a day, and a total drop of about 51% in the last month, after the digital currency traded at an all-time high in April at a price of about $ 63,000. The currency then recovered and traded around the $ 40,000 level. Bitcoin is the most popular and well-known digital currency on the market, but with the falls in it, the values ​​of many others have been cut, and the total digital currency market has erased about $ 700 billion from its value since its peak in April. Etherium, the second most popular currency, fell 27 percent to $ 2,418 yesterday.

Musk promises a flight to the moon
The crashes came yesterday after three Chinese government entities issued a warning to financial institutions not to conduct any business related to distributed digital currencies, including trading and barter. China is waging a stubborn battle against alternative currencies seeking to challenge its control of the local economy. As early as 2017, it banned the issuance of primary currencies (ICOs) as a tool for companies to raise capital, and China was one of the first countries in the world to develop digital yuan (e-CNY) as a means to ward off the country’s bitcoin impact.

But the deep declines in the price of the currency did not begin yesterday, but already last week after a series of tweets by Elon Musk, which questioned the energy and operational viability of the currency. Musk has positioned itself as a whale in the crypto market after Tesla, the maker of electric vehicles it manages, bought $ 1.5 billion in bitcoin and announced it would start accepting the volatile currency as a means of payment. He later went on to express support for the satirical coin “DogeCoin” and even promised to fly a SpaceX spacecraft under his control to the moon.

Against the backdrop of these announcements, Bitcoin as well as Dogecoin have seen crazy price increases, but all have been wiped out in the past week after Musk began making negative statements including calling DogeCoin “cheating” and warning not to take any of his currency-related posts seriously, then announced That Tesla will stop accepting payment in Bitcoin because it is not ecological; In between hinted that the company would also sell its holdings in the currency, then actually explained that it did not sell its holdings in it (although at the end of April the company did sell $ 272 million worth of bitcoin coins to “test market liquidity”).

The crypto market is known for its strong volatility, and it has enjoyed growing and declining interest rates over the past decade. The recent currency rally, since the outbreak of the corona crisis, has largely relied on a combination of high market liquidity and the search for returns from institutional investors and small retailers. Against the background of the growing interest in which players are trying to characterize the essence of currencies, whether they can be defined as currencies, an asset that can store value or actually a safe haven in the current financial reality.