“Crash” is a strong word, but is it fair to use it in this situation? There’s no denying the facts, and the facts are that Bitcoin and many other cryptocurrencies experienced something of a downward turn towards the end of May. It wasn’t just a little slump, it was a dramatic decrease in value that saw Bitcoin hit a low point of $30,000 at one stage. Everyone was going crazy, assets were being shifted on and sold straight away as every investor’s worst nightmare seemed to be looming: the crash of the crypto market.
Things are slowing down slightly, and there have been days where Bitcoin and other cryptocurrencies are on the up. It’s far from the raging market we’re used to seeing, but it doesn’t look as though things will crash any further just yet. Of course, that should be taken with a pinch of salt – nobody saw the market crashing quite how it did a week or so ago, so who’s to say what will happen next. Things could get worse or they could get better. How worried should you be about all of this? Is it the beginning of the end or merely a blip in the road?
History shows this has happened before
One reason many investors aren’t too worried about this crash is that things like this have happened before. If you look at the history of Bitcoin, you’ll see it experiences periods where it loses value quite dramatically, then it goes back up again. We only have to look back at 2018 to see a prime example of another big market crash. This one was even worse, with Bitcoin hitting a high of $20,000 before crashing down to just over $3,000.
At the time, nobody envisioned that the crypto market would recover. Traditional investors and people on Twitter with no investment experience were all saying ‘I told you so’ and taking the high ground. However, things definitely did pick up, which is reflected by the fact that even with a huge drop of over 50 per cent at one point, Bitcoin’s lowest price during this recent crash was $10,000 over its peak in 2018. In fact, it reached an all-time high of over $60,000 before this drop, showing that the previous market crash really had no impact on things in the long run.
Consequently, many believe that a similar situation will present itself here. There might be a low period, and the price could drop further, but the long-term plan could still be in place. There’s every chance that Bitcoin and the crypto market as a whole can bounce back and become more valuable than ever before.
By nature, Bitcoin is volatile
Carrying on from the previous point, as an asset, Bitcoin is generally just a volatile thing to invest in. If you already have some Bitcoin, you should know that it experiences massive fluctuations all the time. As of writing this, information on Marketwatch shows that there’s been a difference of around $2,000 in Bitcoin’s peak and lowest prices today alone! That may not seem like much when you look at its overall value, but that’s a lot of money right there. If you bought and sold at the right time, you could be thousands of dollars richer today alone!
So, there’s less reason to worry about the current crash as this is sort of what Bitcoin is known for. It will drop in value, but it ends up coming back up eventually. The main point is that you shouldn’t see Bitcoin’s fall in value as something that will continue to happen because it’s a relatively normal thing, particularly after hitting a new high point.
The rise of gold
Should you be worried about the market crash when you learn why it came about? Well, many things factor into a market seeing a bit of a crash, and one of those things was the rise in gold investments. Gold went through a period where it started to increase in value yet again. So, lots of investors were selling crypto and cashing in on gold. As a result, all of this selling panicked people, driving the prices down and escalating things into a market crash.
There is a slight fear that, if things like gold continue to increase in value, people will shy away from crypto. Gold has always been a popular investment as you can have something physical to hold. Not only that, but anyone can technically have a gold investment without realizing it. If you have gold jewelry at home, now is the time to consider selling it. Sites like Diamond Banc can be found here, where you’re able to sell jewelry and get cash in return. If the market for gold is on the up, it can mean you will get more money for your gold items than previously. So, why not cash in while you can?
Gold’s newfound popularity could be a worry for cryptocurrency investors, but at the same time, you really have to take a step back and think about things. The price of gold will settle again as it always does, meaning people come back to a market that’s volatile and offers great opportunities.
China’s digital-asset policy
Another cause of the crash came from stories out of China that the country was cracking down on digital assets. In essence, they wanted to add restrictions to crypto activity, which got a lot of people terrified. If China puts in restrictions, it could mean grave consequences for the market. So, amid the panic, lots of investors started selling like crazy.
Ironically, this is actually old news. Veteran crypto investors will know all about this as it’s been spoken about for ages. So, the only reason the market crashed was that people overreacted to old news. China has threatened to do this before, but the popularity of crypto means there are lots of new investors in the market right now. They see news like this, freak out, and start selling – which causes a crash.
Celebrity power
Elon Musk is never far from the news whenever anything to do with cryptocurrency hits the airwaves. Some are saying that him declaring Tesla will stop accepting Bitcoin until it’s more eco-friendly caused the crash. Indeed, people listen to celebrities all the time, and many people sold their BTC out of fear that a crash would happen as more companies joined Tesla.
Of course, this raises the debate of celebrity power and the crypto market. It definitely seems as though this is the one market that’s heavily influenced by celebrities. If loads of big celebs all start buying a cryptocurrency, everyone jumps aboard the bandwagon. Will the same happen if celebs start selling?
The Bitcoin conundrum
You’ll notice most of this article focuses on Bitcoin despite the fact we’re on about the general crypto market. This is because, when Bitcoin suffers, it has a ripple effect on the rest of the market. Therefore, should you be worried about Bitcoin dropping even further in value as it could mean your other crypto assets decrease? Sadly, this is a risk you take when dealing with this market.
In conclusion, how worried should you be about the recent market crash? The short answer is that you shouldn’t be overly worried, just a bit cautious. Be aware of what’s going on, but don’t go crazy and start selling everything you own. History has shown that this market goes through tough periods now and then. Furthermore, history has also shown that there are usually new highs following the lows. Instead of seeing the crash as a bad thing, perhaps you should view it as an opportunity!
Contributors
