Bitcoin Crash: Why You Need to Worry?
Posted On May 9, 2023
The cryptocurrency world has been quite volatile over the past many years, and the biggest movements were the Bitcoin Crash that took place in 2021. This was an unprecedented event that happened in the crypto world that shocked these markets as well as caused people to fear and doubt their investments. However, why did it take place, and why do investors need to worry about worried? We will check all these answers and more at Cryptobase.
Why’s Crypto Crashing?
Cryptocurrencies have been the most volatile investment, so it does not take much time to trigger a downturn. Another contributing factor could be Elon Musk’s announcement that Tesla will no longer accept BTC as a form of payment.
After that China started cracking down on cryptocurrency mining, hence resulting in the crypto rates plummeting more. The IRS revealed that this was getting a bit stringent about collecting the taxes on cryptocurrencies that will have contributed to this crypto crash.
Cryptocurrencies are quite volatile, just because they are a bit speculative and most investors are on the fence about it. No one knows if cryptocurrency will exist in some years, and when the rates begin to fall, many nervous investors may panic and sell – thus causing the prices to drop further.
Reasons to Consider
Firstly, the value of crypto was quite overvalued at a beginning of 2021, thus leading to the eventual crash. Bitcoins are speculative investments and market capitalization that measures the worth relative to various other virtual currencies, was just very high for an underlying aspect of this asset to support. Also, the cost was later pushed to the unrealistic stage by the high investor demand as well as excessive trading volume, thus making it totally unsustainable in the long term.
Secondly, as is typical with some speculative assets, most of this activity in the crypto space will be carried by rumours and hype instead of facts. Some months leading to the crypto crash and speculation over Bitcoin’s prospects also led to the frenzy of activity, which sent costs soaring as well as attracted attention of the new investors as well as day traders.
With a lot of trading activity in a short period of time, this market became full-flooded with buyers and sellers who did not necessarily know the risks linked with cryptocurrencies. The end result was the Crypto Crash was totally inevitable and did not come as any surprise.