Bitcoin has been in the center of attention this year for reasons other than popularity. The price fluctuations of the most widespread crypto have fired numerous speculations and have hit other cryptocurrencies, as well. The last three months have been extremely tough for Bitcoin investors with an unclear future of the asset, but now it’s coming back – hitting 50,000 USD for the first time after May 2021.
During the last 24 hours, Bitcoin has increased by about 2.4%. We can clearly remember the times when the crypto was peaking at 64,000 USD in mid-April of this year, as well as the turmoil on the digital currency market when it was trading below 29,610 USD just a month ago. Even though it has not been the most stable investment option, such fluctuations got everything by surprise. While reasons behind the extreme volatility of the market are purely based on investors’ emotions and speculations, it was exactly the enthusiasm of retail investors that drove the price of bitcoin to soar again.
What are the factors affecting BTC price?
It is not easy to blame the struggle of Bitcoin on a single factor only. However, many experts claim that the eventual downturn on the crypto market followed the official statement of Tesla Inc. which announced it would no longer support Bitcoin payments for the purchases of the Tesla electric vehicles. The event also coincided with the introduction of the Chinese regulatory framework against crypto trading within the country.
Elon Musk effect
Elon Musk has turned into a name known to any individual distantly mindful of digital money. With more than 55 Million devotees, the CEO of Tesla, SpaceX, and The Boring Company is by all accounts shaking the crypto world with his controversial tweets. His relationship with digital currencies has been an intricate one. To begin with, he cherished them, and afterward, he supported them, presently he believes it’s horrible for the climate.
Each time he tweets about digital currencies, the market appears to respond to them. Weirdly enough, not only the regular traders but also the financial institutions and brokerage companies seem to be huge Musk fans. Each of the best ECN brokers will have Elon-dedicated pages, blog pieces, or regular market news for the crypto traders as they know that Musk is the most influential figure on the market. Does that demonstrate that Elon Musk’s tweets are exclusively answerable for the crypto market developments? Allow us to talk about it in more detail.
By 2019, the distrust around digital currency took a superior transform for Elon as he wandered into a more dedicated crypto venture. He began considering its innovation and utility as a possible part of his plans of action.
In the midst of numerous foundations like Microstrategy, Square, and so on, approaching to put resources into Bitcoin as support against expansion, Tesla declared that they had put resources into $1.5 billion worth of Bitcoin. In the long run, Elon likewise tweeted that Tesla will be tolerating installments for their vehicles in Bitcoin as well. The declaration came as a major cheer for the crypto trading community, and numerous new financial traders entered the market. An institutional Goliath, for example, Tesla backing the game just added to its believability. Before long he reported this, Bitcoin arrived at its then, at that point untouched excessive cost of $58,000.
Tesla sold 10% of its Bitcoin holdings in April, which caused panic among investors. Elon replied to this tweet by stating that Tesla had sold Bitcoin to test its liquidity and that he still owns his Bitcoin investment. Soon after, Elon Musk broke many investors’ hearts with tweets questioning the environmental impact of the asset. In a tweet, Musk stated that Tesla would no longer accept Bitcoin payments due to its high energy consumption.
The decision caused cryptocurrencies to plummet and Bitcoin dropped to almost $30,000. Earlier in the week, he still played with crypto. He used Twitter to express his support for miners making their processes more efficient. The tweets led to Bitcoin trading at $39,944 (a 19% jump from the previous low of $30,000.
Regulatory Frameworks against Crypto
Regulators around the globe are also more concerned about Bitcoin and other related assets as they become a larger part of the financial market.
We believe that government crackdowns on crypto can cause another “crypto winter” and less trading activity. Harsher crypto crackdowns are possible in many developing nations that may consider crypto a threat to their fiat currencies or monetary system,” Harshita Rawat, Bernstein’s director of research, said in his official note.
China, which is fostering its own administration-run cryptographic money, reasserted its principles against other cryptocurrencies recently, prohibiting monetary organizations from offering types of assistance for crypto exchanges.
Dogecoin’s rise, which started as a joke and gained greater popularity with Musk’s help, may have also hurt the credibility of the crypto market. The rise in speculative day trading stocks in large numbers may have been responsible for some of the more modest moves in smaller coins.
In recent weeks, interest has also been shown in other less serious cryptocurrencies. Barstool Sports founder Dave Portnoy said Monday that he had purchased $40,000 worth of saif moon cryptocurrency, which he called a “shitcoin.”