abbyb

Undoubtedly, the recent fallout of Bitcoin shocked the crypto industry. Following the negative trend, other cryptocurrencies also entered a bearish wave, including market-leading assets such as Ethereum, Tether, Binance Coin, Cardano, and MATIC, as well as the trendy DOGE. Even though many people point out Tesla's recent decision to get rid of their Bitcoin reserves as the main reason behind the fallout, but the situation is much more complex than it appears to be. In this article, you will discover the events that led to Bitcoin's fallout and caused other cryptocurrencies to fall. You should read this, especially if you decided to buy bitcoin with credit card when it was at the peak of $60,000, so you can see what steps you can take. Bitcoin Bear Market in May 2021 Only in 2021, Bitcoin has oscillated between moments of great euphoria with moments that simply made investors tear their hair out. The world's most valuable digital asset reached $64,000 in April, but its price recently melted after billionaire Elon Musk announced on his Twitter account that Tesla would not be going further with its investment in Bitcoin. The controversial statement showed Musk criticizing the environmental impact of Bitcoin mining and pushing for future regulation. In May alone, losses amount to more than 30%. For many analysts, the recent instability wave simply demonstrates the market is still undergoing a process of maturation, meaning it is hard to have a precise forecast. Also, many believe that regulation can be a solution. Despite the ongoing bearish mood, many investors believe there is still a possibility for a Bitcoin recovery in 2021. China's Massive Regulatory Approach on Crypto Assets Another factor that contributed to the recent Bitcoin fallout was the pressure of the Chinese government against cryptocurrencies. Despite being the largest Bitcoin mining hub in the world, China now suffers from the advancement of new regulatory policies against speculation. According to the country's deputy prime minister, Liu He, the country must crackdown on Bitcoin mining to sternly prevent and control the financial risks associated with crypto asset-related speculation. In fact, China's recent approach surprised many investors, especially as the country was expected to be more flexible in this sense. Instead, Chinese authorities recently warned the country's banks and financial institutions to not accept cryptocurrencies as means of payment or offer any crypto-related services and products. New Players in a Nascent Market The increasing popularity of blockchain technology and digital assets has attracted an astonishing number of investors, including many traditional companies and investment funds that started to venture into the world of cryptocurrency. Consequently, the huge entry of a larger number of investors (including retail investors) into the crypto industry is also reflected in the recent cryptocurrency price falls, especially when considering Bitcoin's fallout was followed by several most cryptocurrencies in the market. To a lesser extent, it is safe to affirm that a huge volume of sales made during the recent trend came as a result of movements made by new portfolios, owned by investors who have had Bitcoins for less than a year. Also, even though cryptocurrencies are increasingly inserted in the global financial market, the number of investors is still quite small when compared to the traditional financial market. Hence, such numbers demonstrate that the digital assets market is an exception to the rule, unlike traditional markets, it is not necessarily influenced by waves coming from the international stock or derivatives market. Cryptocurrency Regulation - Short-Term Expectative Recently, a FED report revealed that it is part of the Biden administration's proposal to strengthen tax policies, which includes a declaration requirement for transfers over $ 10,000 worth of cryptocurrencies to the Internal Revenue Service (IRS). Even with the regulatory issue, it is still possible to see more and more companies putting part of their reserves in cryptocurrencies. After all, Bitcoin offers mobility and optimized hedging that other assets lack (e.g., gold). The regulation of the crypto market is a complex issue in the US, as there are several tax authorities and entities that contradict each other when talking about the matter. Recently, leaders of major banks like Goldman Sachs and JP Morgan have spoken out calling for more definite rules regarding cryptocurrency regulation. Final Thoughts The recent Bitcoin fallout was followed by several other cryptocurrencies, but many experts alert that these high levels of volatility and price speculation are a side-effect of a short-term market correction. Despite the current scenario, many experts recall past declines and recoveries to support their belief that Bitcoin prices will eventually recover. For instance, after the crypto bull market in late 2017, when Bitcoin was being traded around $ 20,000, the asset's price lost almost 90% of its value in the following year (2018). Other issues also compromised Bitcoin's price, including China's regulatory pressure, the increasing volume of both retail investors and investment companies, as well as news about the new regulatory approach by US FED.