The cycle of volatility continues for the world’s most controversial coin
The price of Bitcoin has crashed to $38,885, a 14% drop in less than one week. This is the lowest level since Feb. 9, the last time it dropped below $40,000. Bitcoin has slumped by about 38% from its all-time high of $64,829.14 in mid-April.
In a camera phone flash, millions of crypto traders around the world including Chinese buyers and immigrant investors have lost millions of dollars. One trader on the Huobi offshore Exchange, lost $67 million overnight
Negative news over the past week has dampened the exuberant sentiment for bitcoin. On May 12, Tesla CEO Elon Musk said the electric carmaker had stopped acceptance of Bitcoin, citing environmental concerns over the so-called computational “mining” process. This is where high-powered computers are used to solve complex mathematical puzzles to enable transactions using bitcoin.
Musk’s comments caused over $300 billion to be wiped off the volatile crypto market in a single day. Early this week, the Tesla CEO suggested the company may have sold its bitcoin holdings but this was later denied.
The latest Bitcoin slump is coming from China. Earlier this week, three Chinese banking and payment industry bodies issued a statement warning financial institutions not to conduct virtual currency-related business, including trading or exchanging fiat currency for cryptocurrency
China’s hard line on digital currencies is not new. In 2017, authorities closed down local crypto exchanges. Traders in China once accounted for a huge share of the bitcoin market but after the crackdown, their influence was reduced significantly. Chinese cryptocurrency operations have moved abroad.
Bitcoin is still up 40% year-to-date and more than 300% in the last 12 months. Other cryptocurrencies also plunged. Ether, the digital currency that powers the Ethereum blockchain, was down nearly 16% at $2,960 and Dogecoin also fell 16% to $0.4189. Around $270 billion had been wiped off the entire value of the cryptocurrency market in the last 48 hours
Is this the end of Bitcoin?
Bitcoin is no stranger to volatility.
Bitcoin’s price has crashed many times and seen multiple bubbles in a short history.
- In 2011, Bitcoin jumped by 3200% from just $1 to $32
- Later that same year, the price crashed by 93%
- In 2013, it moved from $13 to $.220. By April it collapsed to $70. And by December it was up again to $1156
- Up and down from 2015-2017
- 2017 saw the biggest move, flying from $1000 to $20,089
- Slumped from 2017-2019
- 2020, the year of the pandemic, Bitcoin skyrocketed from $7200 to over $32,000
- In April 2021, it hit a record high of almost $64,000
Vijay Ayyar, head of business development at cryptocurrency exchange Luno, said that a 30% to 40% pullback is “normal” during bitcoin bull markets. “So this is very much expected after we topped out at 64K ($64,000),” he said.
“Bitcoin’s pattern over the last 10 years has been meteoric rises followed by pull-backs,” Joe DiPasquale, the chief executive of bitcoin and crypto hedge fund BitBull Capital, said in a Forbes report.
Once more investors and speculators alike ask the question. Has Bitcoin reached the end of the road and is the party finally over? Or is this a buying opportunity? For some, bitcoin is more than an investment. It is an ideology- a pathway to a radically different economic structure. For others, it is simply a tradable resource with no emotional underpinnings.