The Truth Behind The Recent Cryptocurrency Market Drop
The cryptocurrency market is experiencing one of the harshest drops in recent history. After the fall of the Bitcoin price to the $30,000 level, many altcoins followed the path, and the market was red for an entire day. Many futures contracts were liquidated, and lots of retail investors sold their holdings in fear of more loss. But it’s not the first time we see Bitcoin price goes down, and altcoins follow it. Many experts think it’s a correction in the market, while others believe we should expect a long time for the next bull run in the crypto market.
Bitcoin, as the major cryptocurrency in the market, somehow acts as an index. Although there are many analyses and indicators that focus on Bitcoin dominance and believe that Bitcoin price doesn’t always affect the market, big drops always have big effects. When the Bitcoin price fell from about $42,000 to $30,000, many altcoins experienced a similar drop, and lots of investors sold their assets to prevent more losses. But on the other hand, many big experienced investors decided to buy the dip and are following their long-term strategy as always. But what happened to Bitcoin and other cryptocurrencies in the recent drop?
Market experts point to many factors as the reasons for the price drop. Some blame Elon Musk for tweeting about Bitcoin and saying it consumes lots of energy. Others talk about the recent regulations in China. After all, there are always numerous factors that come with each other and result in big drops in the market. Sometimes they act as dominoes to create danger for the market. For example, someone sends a negative tweet about Bitcoin. Some newcomer investors sell their assets in fear of loss. The price goes down, and others follow the selling behavior that results in more loss.
People always compare the price drops of Bitcoin to historical events, the 2018 crash, for example. But the situation isn’t always the same. Currently, more people own Bitcoin and other cryptocurrencies, and many try to prevent more drops in the market – they don’t sell their assets, for example.
As mentioned before, Musk’s tweets and regulations are the biggest reason for the recent drop in the crypto market. The tweet shows that institutional money may be going away from the market. The future contracts also show that some big investors are moving back to gold (Source). The regulation challenge affects the market considerably, too. Some believe that government crackdowns may even result in another crypto winter in the coming years (Source).
Some experts claim that the rise of Dogecoin and other meme coins may have affected the credibility of the crypto market. It may result in less trust in the market mechanism and prevent new investors from bringing their money to the cryptocurrency industry. After all, the time must go on as always, and we should wait to see the reaction of the market to all of these headlines and price drops.
A Bitcoiner since 2017 and a Bitcoin Maximalist since 2018, Tommy is our main writer and editor at Bitcoin Maximalist. Other than researching and writing about Bitcoin, Tommy loves spending time with his family and supporting his beloved Leeds United.