3 Reasons Why the Crypto Market Corrected This Week
This week, the world saw nearly $1 trillion wiped from the cryptocurrency market, an event that sent shockwaves through a market that is more than familiar with volatility. Coins like Bitcoin, Ethereum, BNB, and others slumped as much as 30% over a period of 24 hours. Nevertheless, this fall in prices was deemed to be a short-term correction by analysts and experts. Here are three reasons why the crypto market corrected this week.
1. A Perceived Chinese Crackdown on Crypto
A statement released by the Chinese Banking Association incited a ton of FUD (fear, uncertainty, and doubt) amongst traders as a crypto crackdown in the world’s biggest economy loomed. The statement had warned financial institutions of crypto, stating that they should “absolutely refrain” from providing digital asset services due to their volatile nature. This effectively banned Chinese financial institutions and payment companies from providing any crypto transaction services including trading, clearing, and settlement. For veteran crypto investors, such statements are not new and are routinely released by similar authorities.
2. Rumors of IRS Investigations
Rumors also floated around this week about the IRS possibly investigating one of the world’s largest crypto exchanges, Binance. News of this probe led to panic sell-offs by nervous traders despite the fact that Binance has been cooperating with the agency, and no incriminating evidence has been found as of yet.
3. Timely Tweets from Tesla CEO
All this was only compounded by billionaire Elon Musk tweeting that his company Tesla would no longer be accepting Bitcoin due to concerns “about rapidly increasing use of fossil fuels for Bitcoin mining and transactions”. Musk later on released a statement revealing that contrary to popular opinion,”Tesla will not be selling any Bitcoin”. The firm currently owns over $1 Billion worth of cryptocurrency.
Further putting pressure on prices were momentary blackouts experienced by big crypto trading platforms such as Coinbase. These matters have since been resolved.
Despite the shaky market, Bitcoin’s new price prediction is a stunning $500K
After it dropped below $36K and sent panic through crypto communities, financiers and analysts are still certain that the future is more than bright for Bitcoin. The CEO of ARK Investments Management Cathie Wood commented on the market crash, stating that she believes the coin will surge past $500,000.