- The cryptocurrency market experienced a massive slump in prices which placed it firmly in a bearish market.
- The bearish sentiments plaguing the market may be traced to the comments by the CEO of Tesla (NASDAQ:TSLA), Elon Musk concerning the environmental impact of Bitcoin.
- By all indications, the market is poised for an upward trajectory that could see the values of cryptocurrencies climb by 40%.
- The dip bears some similarities to the market crash of 2020, in which prices fell amid Covid-19 concerns.
The cryptocurrency market was thrown into a state of disarray following the recent comments by Elon Musk about Bitcoin’s energy consumption metrics. This triggered a chain reaction in the crypto ecosystem as coins shed significant portions of their values.
This latest crash in the cryptocurrency industry is reminiscent of the crash of March 2020. Market capitalization fell by as low as 52% and later reversed, ushering in one of the strongest bull runs in the history of cryptocurrencies. If the market gains 40%, it will bring it one step closer to +70%.
The Epic Market Crash
In the last 7 days, the cryptocurrency sector has experienced the worst slump in 2021, after the global crypto market capitalization fell to lows of over 30%. Cryptocurrencies such as Bitcoin, Ethereum, and Binance Coin bore the brunt of the slump in prices after they fell to dizzying new lows.
Particularly, Bitcoin reached a low of $30,681 from an all-time high of $64,863 about a month ago, while Ethereum fell to lows of $1,952 from an all-time high of $4,362.
Several reasons have been advanced for the bearish sentiments in the market. Chief amongst these is the U-turn taken by Elon Musk to stop Tesla from accepting payments in Bitcoin on the grounds that Bitcoin mining is reliant on fossil fuels which is a contributory factor to global warming.
Asides from the climate concerns, another factor is the proposed tax increment that the Biden administration proposed, and the straw that broke the camel’s back was the statement from Chinese regulatory bodies banning financial institutions from facilitating cryptocurrency transactions.
On the Flipside
- Amid falling cryptocurrency prices, Cardano weathers the storm to reach its all-time high of $2.46.
- The reason for Cardano’s strong price rally may be ascribed to the fact that the network is energy efficient, using only a fraction of Bitcoin’s energy consumption rates.
- The network runs on a proof-of-stake blockchain algorithm rather than the power-hungry proof-of-work
Market Recovery
The global cryptocurrency market capitalization currently seats at $1.68 trillion, reflecting a 13.70% slump in the last 24 hours. The market volume also indicates the general bearish sentiment, decreasing by 20% to settle at $229.74 billion.
This slump bears a striking resemblance with the cryptocurrency crash of March 2020 in which the cryptocurrency market capitalization tumbled to new lows following fears around the Covid-19. Since then, the market recovered, ushering a strong bullish trend that saw several cryptocurrencies exceed their previous all-time high.
According to historical antecedents, this dip in prices is fairly a common occurrence in cryptocurrencies and this assertion was reiterated by Charles Hoskinson, the founder of Cardano.
He made a tweet that read, “…For all the new kids in crypto, welcome, these days are surprisingly common.” Tesla’s CEO, Elon Musk, also sent out a tweet that suggested that the automobile producer will be holding onto its Bitcoin assets in anticipation of the market gaining back its previous losses.
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