Team, we are back at it and this week I have been asked more times than I can count. Is Bitcoin going to keep crashing? My personal thoughts are that all signs are pointing to yes, but will the bear market take us lower than $20,000? Well lets look into that.
First off, why is Bitcoin currently in a bear market and why is Bitcoin crashing? There are several factors that are obvious to most people. First being China clamping down on all mining, with some experts openly saying its because China is preparing to release their own blockchain currency. This is a massive issue for Bitcoin as it is said that within China there are 4 main companies that do the mining which totals to a whopping, wait for it…. 50%!!
Another factor being that there was a massive seizure of Bitcoin ($2.3m) and rumours were that law enforcement were able to hack in and take all the crypto held. However, documents were later released that they obtained the currency via an exchange. In February, Elon tweeted that Bitcoin’s price was too high. Elon/Tesla also publicly said that they were no longer accepting payments in Bitcoin due to the damage the mining is doing to the environment and stated that mining has more transmissions than any fuel. At the time of the statement from Tesla, there was also a major sell off not long after. Elon later said on Twitter in a reply to someone that Tesla will look at Bitcoin if Bitcoin is able to reduce the energy consumed in the mining process.
With these factors affecting Bitcoin, the whole crypto market took a loss due to Bitcoin’s market size dominance. This has lead to more panic throughout, bringing Bitcoin down even further due to the market feeling more volatile. Bitcoin is commonly referred to as the gold of crypto currency meaning it feels like the safest investment. Crypto markets have shaved more than $850 billion from their combined market value, according to CoinMarketCap.com. Finally all these factors have lead to late stage investors selling out to minimise their losses.
We have touched on some key factors to why the market is continuing to be a bear market, now lets look at the possibilities of Bitcoin declining to $20,000 AUD. As late stage investors leave with their tails between their legs, early stage investors are going all in. Many large investors known as whales such as Michael Saylor who has reportedly invested a total of $500 million in Bitcoin with his firm MicroStrategy. MicroStrategy has most recently added an additional $50m to their Bitcoin portfolio.
Many experts do not believe Bitcoin will drop much further however, the next few months will be very crucial for Bitcoin’s future value. My personal opinion is that the market is seeing a much needed correction that was long overdue. Along with Bitcoin the stock market and property market are also overdue for a proper correction, I truly believe the three markets haven’t properly reflected the actual world economy position due to covid and other unrelated factors.
In summary, yes I believe Bitcoin “could” drop to $20,000 AUD, but I don’t think it will stay there for long. In my opinion Bitcoin is here to stay for the foreseeable future.
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