Bitcoin (BTC), the largest cryptocurrency by both trading volume as well as market cap tanked a sharp 30 percent in a single day to a low of $30,001, extending its previous week's losses, The losses are amid a heavy sell-off in the cryptocurrency space.
Since late January, the most popular currency did not traded below $30,000. But from a price of $43K in early morning trade on wednesday, bitcoin's price first crashed below $40,000 and later continue to erode in value.
Few reasons why bitcoin went down today
The current sharp weakness in the cryptos and largely Bitcoin comes amid back to back Tesla tweet's who last week firstly disqualified Bitcoin's use in the purchase of its Tesla vehicles. Also, the last week saw huge outflows from bitcoin as investors moved their funds from bitcoin to other cryptos seeing a halt in the rally in bitcoin.
Another concern that emerged and pulled down the popularity of bitcoin is the environmental cost associated with it. "Bitcoin's perceived environmental costs are becoming a bigger and bigger part of the narrative, boosting the relative appeal of ethereum and its upcoming transition to the less energy-intense proof-of-stake security model," Matt Weller, global head of market research at Forex.com, is quoted as saying in a leading publication.
China Clampdown and US Inflation concerns all weigh on the cryptomarket
In China, clampdown on cryptocurrency trade has also weighed on the sentiments. Furthermore, with inflation concerns igniting in the US and Asia, the crytocurrency market has even not been spared. Other cryptos including the likes of Ethereum, XRP or Ripple are also seen trading with losses of over 25 percent at the time of writing this report.
The free fall in bitcoin unlikely to settle soon
A major investor Mike Novogratz told CNBC that this meltdown in bitco"Humpty Dumpty never gets put back together in two days ... when he cracks. It's going to take a while. The market will consolidate. It will find a bottom somewhere. I'm hoping its close to here," Novogratz said.in shall not fixed so soon.
Also, he dubbed the slump to be 'a liquidation event' and on "Squawk Box"stated that bitcoin's morning plunge feels like capitulation.
So investors may unlikely see any sharp recoveries soon in the space. Also, some of the predictions for bitcoin suggest that year 2021 will see corrections in its price going forward. Now that bitcoin prices have corrected sharply, here is how you can decide on the investment.
Also some of the investors into the digital token are taking their worry to the #Bitcoin on Twitter and said while it was suggested to buy the dip, buy the dip, i bought and now see my positions dipped. Another individual is seen to be commenting that this is not the end for bitcoin but it is the biggest opportunity being thrown opened for you for investment in 2021.