The value of bitcoin has dropped by 10% this June already, while Dogecoin prices lost 25% once the new Chinese government order took effect. For the first time in three months, Bitcoin’s value has dropped below $30, 000 which is a new low.
The new volatility has tumbled down the price of bitcoin by 10%, and recent clampdowns showed no signs of being lifted as market players cite fear over China’s expanding crackdown on mining farms. So aside from China’s rule, what is causing cryptocurrency to drop?
What’s bitcoin’s current price?
The price of bitcoin keeps floating around the $30000 mark. The current price has dropped to a new 24-hour low of $28, 814.75 and this is the lowest it has gotten to since January. Many bitcoin investors are using this opportunity to double down on their investment while believing that the prices would rise again.
One investor was quoted as saying, “given the strength of the 30K support, we shall see a steep sell-off if the support is broken”, putting the next stop at $20K. Another investor thinks “failure of $30,000.00 will open the trapdoor to a sub-$20,000.00 move”.
These quotes come after bitcoin hit 8.3% on Monday, which puts it on course for its biggest daily drop in over a month. Even Ethereum, too, have moved in accordance with bitcoin and have all suffered, falling 12% down below $2000 for the first time in a month. So what are the causes of this price drop?
Why are crypto prices falling?
The fall in the price of crypto is because of the increasing crackdown on cryptocurrency by the Chinese government. On Friday, authorities in the southwest province of Sichuan ordered the closure of bitcoin mining projects.
The state council vowed last month to use this as a means to clamp down on trading and mining as part of its plans to control financial risks. Sichuan is bitcoin’s second-biggest producer after the production of bitcoin in China accounts for about 65% of the world’s production.
The crackdown on miners means that they’re offloading the coins into a thin market which is causing the price of bitcoin to drop, meaning companies with large inventories of cryptocurrency who move to sell a large number of their coins depresses the price of the overall market.
The crypto faithful is struggling with the tumble in tokens that were used in the formation of decentralized finance or Defi applications. This new crypto allows people to borrow, lend, trade and obtain insurance from each other through blockchain without the use of banks.
Due to traders in China accounting for a large portion of the Bitcoin market, as soon as the crackdown was enforced, their influence in the market was reduced. Currently, Chinese cryptocurrency operations have been taken abroad, so it may take some time before bitcoin hits its new high reach, according to BitcoinRejoin.
According to a director at a crypto hedge fund, “the crypto market is processing the different cascade of news that fuels the bear case for price development. Since the ban, over $250 billion have left the market space leaving the currency weak.
In terms of outlook, things may not be looking so well for bitcoin, but according to history, this is just one hurdle bitcoin would have to overcome, and it’s quite small compared to what it faced in the future.
Will Bitcoin’s price rise again?
It is difficult to tell whether Bitcoin’s price will rise again or go down further. Being highly volatile in nature, the value of Bitcoin fluctuates a lot. Sometimes it’s a constant increase in price, and sometimes it’s a constant fall in prices of bitcoin, which is the current scenario. Perhaps after weeks or months later, you can see a rise in the price of Bitcoins.
Now with several concerns with Bitcoins like China’s expanding crackdown, several banks have stopped payments to cryptocurrency, Former president of US Donald Trump referring Bitcoins as a scam to overrule dollars, concerns about the environment and scams related to Bitcoins are still barriers to rise in the price of bitcoins.
It is better to stop selling your bitcoins by looking at the fall in the value of Bitcoin and see bitcoin as a long-term investment option to earn higher profits. The value of bitcoin and other cryptocurrencies is determined totally on speculation. You cannot lose money even if the price of bitcoins falls until you decide to sell your Bitcoins at a lesser price than you bought them for.
Since due to high volatility, the way prices are falling can go up as well. It is advisable to leave your money invested and wait for the right time to sell bitcoins when the prices are maximum. If everyone thinks prices will go down and sells their bitcoins, then the value of Bitcoins falls or in case of events that adversely affect the value of Bitcoins.
Is it the right time to buy Bitcoins?
With a steady fall in the price of bitcoins over the last few weeks, it’s been a major concern among investors and traders. Though you won’t lose money until you don’t sell your Bitcoins and if the price of Bitcoins rises in the future. Investing in bitcoin is totally based on your speculation, prediction of the crypto market, and knowing when it is the right time.
With bitcoins and other cryptocurrency prices falling, it can be a good time to invest in Bitcoins during its downturn. But the question is should you wait for the price of bitcoin to go down and whether the prices of Bitcoins will rise, having barriers like environmental concerns and strict regulations for cryptocurrencies like Bitcoins. You have to be smart enough to predict the future outcomes before investing your money in bitcoins. Profits can only be made out of Bitcoins if you are thinking of a long-term investment.
Buying investments when prices fall and are minimum and selling them when prices go high and are at their peak is the basic rule for any investments. Though it sounds simpler than it actually is, investing in Bitcoins can be risky. Invest that much amount which you can afford to lose, don’t spend your hard-earned savings or emergency deposits for investing in Bitcoin. Determining the right time to invest Is extremely challenging, especially with cryptocurrencies, including Bitcoins. Investment is all about trusting your predictions and instincts.
Conclusion
As a decentralized system of trading, the lack of infrastructure and banks to crosscheck transactions or exchange systems makes mining important to the value and functioning of any cryptocurrency. So when states begin to put measures in place to curb the activities of currencies that have to do with lots of mining, there will be a significant drop in the cost and value of bitcoin.
