Bitcoin (BTC): five takeaways from the latest crash
Let’s all calm down and take a step back! The week commencing 17th May 2021 was a long one for Bitcoin (BTC), especially for new market entrants who lack faith in the potential for the Queen of crypto to enter the six-digit club.
Preamble before getting stuck in
Elon Musk opened up Pandora’s box with criticisms of Bitcoin like the classic “BTC mining is too polluting”. Bitcoin is simply unworthy according to the billionaire, whose fortunes are locked up in the greener-than-green Tesla.
China gave the coup-de-grace by announcing yet another crackdown on cryptocurrencies. You can’t help but wonder if the two giants are colluding together, given the near perfect timing of their attacks, which opened the doors for the bears to invade the BTC markets.
The bulls have been running since October 2020, reaching an ATH of more than $64,700. Is the current crash nothing more than a regular correction in the BTC price? The only trustworthy answer will come from the markets, so cryptophiles will have to wait.
One for the history books
This collapse in the BTC price highlights five key factors surrounding the Queen of crypto and her subjects.
Lesson one: Bitcoin is volatile. This dizzying 40% drop was a booster shot to remind traders that Bitcoin’s price can go down as well as up.
Volatility of this magnitude, however, is not new. The price of Bitcoin experienced significant corrections in 2013 when it first topped $1,000. Then, after 2017’s Bull Run, its price dropped from $20,000 to $3,000 in early 2018.
Lesson two: the mainstream media is bearish on Bitcoin. With blood running in the streets for the BTC markets, the anti-crypto media are reveling in this fall, always wheeling out the same old story: Bitcoin is made of thin air, it’s not backed by any physical assets, it’s a scam, and so on and so forth.
New York Times columnist Paul Krugman said Bitcoin had no value, while Wall Street Journal star financial reporter Greg Ip likened BTC to Fentanyl – an invention the world is better off without. The New Republic applauds Musk’s “betrayal” for finally “exposing the cryptocurrency scam.”
Lesson three: Bitcoin still has a bad reputation. Who can we thank? Criminals who use it for illegal activities.
The USA’s Colonial Pipeline recently suffered a huge cyberattack, and had to pay a ransom in Bitcoin to the hackers to get the IT system back up and running again.
Lesson four: exchanges can also be harmful to Bitcoin. Even the Nasdaq-listed Coinbase (COIN) still can shut down during peak periods of strong trading activity. The exchange’s customers would certainly have plenty to say about the quality of the Coinbase user experience if they ever got the chance to sit down with one of the company’s executives.
Lesson five: key support levels have held. To end on a positive note, this crash was big, but not big enough to smash through the $30,000 support level.
On-chain data on exchange flows has shown that while retail investors were being liquidated on the back of Musk’s tweeting, the sharp fall in Bitcoin’s price was seen as a huge opportunity for institutional investors to increase their exposure to this asset.
Bitcoin is trading around $37,278 at the time of writing. We can’t wait for the healthy resumption of this rally to silence the bearish ‘experts’ and anti-crypto media who are reveling in this dip!
Hi, Привет & Salut! I’m interested in two things: crypto and languages. So I’m really excited to be part of the multinational CoinTribune team, where I can share my crypto knowledge with people from around the world, one article at a time.