Cryptocurrency: The Future Part(2)
In the previous part, we learned about What is Cryptocurrency, Types of Cryptocurrencies, Evolution of Bitcoin and covered many more topics. In today’s blog, we will focus on the fall of Bitcoin in 2021, its various reasons, and the conclusion.
Fall of Bitcoin in 2021:
We all have seen the game of rising and falling of Bitcoin since it has been released. In 2016 the price was less than 450 dollars but the growth in the price of bitcoin was amazing it went to 11113 dollars. These types of jumps in price push you to think twice about whether you are investing in the right asset or not because an investment of 10k or 20k in Bitcoin in 2016 would have returned you into a multimillionaire. The price of bitcoin is uncertain it can reach any value. Everything is not sunshine in cryptocurrency, everything that rises will eventually go down. We all have seen the fall of Bitcoin in 2018, after the huge rise in the price of bitcoin in 2017, the price of bitcoins fell by about 65% during the month from 6th January to 6th February 2018 and it seems like we are going to face the second crash by the end of this year. There are many factors responsible for bitcoin’s fall that include China's crackdown on bitcoin, Elon Musk’s Tweet, and inflation.
How China is responsible for Bitcoin Crash?
The people’s Bank of China is somehow responsible for Bitcoin’s crash. Just before Wednesday's fall in bitcoin price, the bank released the statement saying that “virtual currency is not a real currency and hence should not be used as currency in the market”.In the statement, the people’s Bank of China warned financial institutions about accepting cryptocurrencies or offering crypto-related products. China has made clear since 2017 that it doesn’t support cryptocurrencies and is currently developing its own cryptocurrency. And hence the statement from China is not so surprising. Anyway, this statement became the reason for bitcoin’s crash in 2021.
Does the price of bitcoin depend on Elon Musk’s Tweet?
Bitcoin’s price does not always depend on the market it can also depend on the person who can make his own market. To give you a sense of this, look at the given graph below. This graph shows the spike and fall of Bitcoin due to Elon Musk’s tweets. The first rise was when Elon Musk tweeted on Feb 8th about his investment in Bitcoin and he was planning for accepting Bitcoin as payment. Then the investors faced a fall in Bitcoin’s price when Elon Musk again tweeted on Feb 20, 2021“That said, BTC & ETH do seem very high lol” after this tweet the market was low. But there was a lot more to come. March 24, 2021, Elon Musk tweeted and invited people to buy Tesla for the exchange of Bitcoin. The market went up but 2 months later something unusual happened. Elon Musk tweeted that “ Tesla has suspended vehicle purchases using Bitcoin”. And the reason he gave was environmental concerns about Bitcoin. A huge amount of electricity is used for Bitcoin Mining and that electricity is produced by Fossil Fuels which may harm the environment. But this reason is not a good reason because his company Tesla focuses on producing electric vehicles and most of the electricity in the entire world is produced by Fossil fuels. And this reason is not a valid reason for not accepting bitcoin for vehicle exchange. So not more digging the reasons we will just move to the conclusion, so as you can see that the price of Bitcoin definitely depends on Elon Musk’s Tweets because he has made his personality so great that he can create a market or he can destroy the market according to his wish.
Tweets that were Responsible for Bitcoin’s rise and fall:
1: The First Rise: Elon Musk’s investment in bitcoin.
2:The First Fall: It was a taunting that resulted in the fall of bitcoin.
3:The Second Rise: After this tweet, people believed that now bitcoin can be used as a mode of exchanging goods and services.
4: The Second Fall: This tweet resulted in the greatest fall after 2018.
