Some investors see the recent huge drop in the value of cryptocurrency as a convenient moment to invest in them while prices are down, despite growing concerns on whether the crypto market can retain solvency.
THE once smooth sailing cryptocurrency market saw a huge drop on Wednesday, with prices of major currencies such as Bitcoin, Ethereum, BNB, and others crashing as big as 30 percent in only 24 hours.
The drop came after Chinese regulators announced a crackdown on the cryptocurrencies.
What happened in China?
China just banned financial institutions and payment firms from providing services related to cryptocurrencies, purportedly due to lack of direct control by regulators on them but apparently to take over and control the burgeoning market.
This means that now, banks and online payment channels are not allowed to offer services involving cryptocurrency such as registration, trading, clearing, and settlement.
China issued a ban back in 2017, but the rules have now expanded the scope of prohibited services and announced that it believes “virtual currencies are not supported by any real value.”
What did this mean for the cryptocurrency market?
According to Binance, a leading crypto-trading platform, its most well-known cryptocurrency “Bitcoin” was trading 21 percent lower than its price 24 hours earlier at only $34,693.1.
Another popular cryptocurrency called Ethereum was down 25 percent at $2,453.15, while Binance Coun or BNB was down 31percent, at $353.12.
Is China the sole reason for the drop?
Bitcoin and Ethereum were previously on a decline after Tesla CEO Elon Musk announced that his company would no longer be accepting Bitcoin as payment, a reversal of an earlier decision he made.
What’s next for the crypto market?
While the drop is alarming from an outsider’s perspective, it is actually quite normal in such a volatile market. Those involved in crypto see the decline as a short-term correction due to short-term traders taking their profits.
Meanwhile, long-term investors see this as a buying opportunity to buy more crypto while the prices are down.
The value of Bitcoin and other crypto currencies can change by as much as thousands of dollars in just a short period of time.
On the last trading day of 2020, Bitcoin closed a bit under $30,000. By mid-April, this shot up to $65,000. Now, it is experiencing yet another negative turn.
More and more people are beginning to invest in them, especially with platforms being more user-friendly and accessible even to ordinary folks with no prior trading experiences.
To properly invest in cryptocurrencies, one must learn about it in order to avoid significant losses. Although people are still skeptical over these new digital currencies, others believe that they are the future of money. (MO)
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