Bitcoin price: Will bitcoin value go up after cryptocurrency crash?
Elon Musk announces suspension of Bitcoin Tesla purchases
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Bitcoin’s price fell drastically on Wednesday after a series of events brought the crypto market down. Firstly, Space X and Tesla CEO Elon Musk announced his company would no longer allow bitcoin as payment for the luxury cars until the crypto coin made more efforts to be environmentally friendly. Mr Musk had been one of the key reasons that crypto has gained so much traction recently, as he’s known to be a big supporter of the concept. Mr Musk’s tweets about meme coin DOGE and bitcoin had supported a big upward swing in these assets – especially recently.
The second factor leading to the drop in bitcoin’s price is China’s new digital asset policy, which has effectively banned crypto.
China announced this week it has banned financial institutions and payment firms from providing services related to crypto and warned investors against speculative trading in the digital currency domain.
This has been Beijing’s final attempt to clamp down on what was a burgeoning digital trading market, especially in China.
Under the ban, institutions like banks and online payment channels cannot offer clients any cryptocurrency services, including registration, trading, clearing and settlement, as confirmed by the National Internet Finance Association of China, the China Banking Association and the Payment and Clearing Association of China.
The banking bodies said in a collective statement: “Recently, cryptocurrency prices have skyrocketed and plummeted, and speculative trading of cryptocurrency has rebounded, seriously infringing on the safety of people’s property and disrupting the normal economic and financial order.”
While China has banned crypto exchanges and initial coin offerings, individuals are still allowed to hold them.
But Chinese institutions must not provide saving, trust or pledging services of cryptocurrency or issue any financial products related to the Digital money, the statement added.
This has obviously been a huge blow to the market as China is majorly involved in technological advances and has led many Chinese investors to dump their stock fast.
Will bitcoin value go up after the crypto crash?
Bitcoin and cryptocurrency are inherently and known for being very volatile assets.
Bespoke Investment Group said the average draw down from a record high is close to 50 percent, and on 69 percent of all trading days overt the last 10 years, bitcoin has plummeted more than 40 percent from its record high.
According to Dow Jones Market data, bitcoin has seen more than 750 instances where prices changed by five percent or more, more than 230 days where it swung by at least 10 percent and nearly 50 occasions during which the price shifted at least 20 percent.
Speaking to Express.co.uk, the manager of Kraken Intelligence Pete Humiston reiterated that crypto markets across the board are in “risk mode”.
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He explained how the news of China’s new digital asset policy “can at least partially explain today’s near $10billion of liquidation and the emergence of ominous technical indicators”.
Mr Humiston added: “Bitcoin has fallen through the $42,000 mark – a critical level of support – and fallen through its 200-day moving average for the first time since April 220.
“Both factors have sent market participants rushing to the exit and led to a sharp sell-off, with bitcoin briefly falling below $31,000 at one point.”
The crypto expert continued: “From where we stand, it appears that many investors are now taking advantage of this morning’s disruption to buy the dip – especially with bitcoin’s 14-day RSI signalling that the last time bitcoin was oversold was in March 2020.
“But crypto has had a breathtaking run over the past couple of quarters, so a strong pull back and consolidation now isn’t surprising – it’s what we’ve seen in all other previous bull markets.”
Galaxy Digital CEO and chairman Mike Novogratz told CNBC the price of crypto may not rise again for a while to come.
Mr Novogratz said: “You had a confluence of events where you started breaking down the positivity in the price action, and now we’ve got a liquidation event.
“It is not going to bounce right back. It will consolidate for a while. It will find a bottom somewhere, and I’m hoping it’s close to here.”
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