$860 Billion Lost to the Crypto Market Just Last Week
The past week was a bad one for the crypto space, with the premier cryptocurrency, Bitcoin, falling below the $30k mark, a move most experts didn't see coming. Whilst the foremost coin has somehow managed to recover a tad bit, it has lost almost half of its total worth while bankrupting a ton of investors. Well, that is expected seeing that the crypto market is, in fact, a volatile one.
Besides the decade-long coin, alternative coins, altcoins as they are fondly called, also experienced massive fall in price, with experts linking it to the Bitcoin price fall.
With altcoins losing over 63% of their market value, reports and analysis reveal that over $860 billion was lost by investors. At the time of writing, the crypto market which stood at over $2.1 trillion as of last month is currently at $1.7 trillion.
In addition to these unprecedented price falls, a ton of crypto brokerages or exchanges had to deal with a couple of problems, one of them being an increased trading volume. Binance, the world's largest exchange based on trading volume, was not left out
While there have been speculations, there are truly two main causes for the fall in the price of these cryptocurrencies.
Leading automatic car company, Tesla's, decision to stop accepting Bitcoin as payment for products bought has been identified as one of the main causes. A couple of weeks ago, the car brand revealed via a series of tweets by early-stage investor and CEO Elon Musk that they would be accepting the premier cryptocurrency and Ethereum as payment options.
Citing environmental problems and the complex computational power used in Bitcoin mining, the CEO’s tweet immediately forced a crash of the budding crypto market. For the unaware, mining is the process of validating transactions on the Bitcoin network, albeit through the use of various high-end hardware devices. While most enthusiasts hoped that Tesla's decision would favor them, the unexpected u-turn has left them in disarray, causing confusion and moving them to answer certain pertinent questions like; is the market truly decentralized?
The second reason, however, is the recent crackdown of crypto mining activities in China, one of the hottest locations for all mining activities in the world. The Chinese government citing financial risks revealed that they would be cracking down on all mining activities in the country.
With China being one of the hottest mining spots in the world, this results in an increased electricity cost. Bear in mind that mining requires enough power.
Expectedly, most enthusiasts on social media platforms, Twitter especially, have blamed Elon Musk's involvement in the crypto market as part of the crash. Some believe that this is a plan of the billionaire to reduce the price of these coins, thereby offering him an opportunity to buy more and hold. While all of these claims are unfounded and at the moment inaccurate, one cannot dismiss Musk’s influence on the crypto market. His recent Doge tweets are proof of the power the SpaceX CEO wields.