The crypto market crash on Wednesday, 19th May. This happened because China decided to ban financial and payment institutions from providing any kind of service to crypto users.
A legion of crypto users saw their wealth early diminished by half as a repercussion of the decision taken by China.
The Crypto market crash also diminished the market value by 30% of some of the most renowned cryptocurrencies such as Bitcoin, Ethereum, BNB.
Another one of the reasons behind the crypto market crash is the concern raised by people over the mining of cryptocurrencies. As their mining has a direct and severe impact on the environment. So the implications of crypto mining can prove to be catastrophic for the environment also.
Elon Musk’s recent comments on cryptocurrencies is also counted as one of the most prominent reasons which led to the crypto market crash.
Market Value Of Cryptocurrencies After The Crypto Market Crash
- Bitcoin which is one of the most popular cryptocurrency, saw it’s value took a dive by more than 40% from it’s peak level of $65,000, recorded in April 2021.
This was a direct result of an executive decision taken by Elon Musk. As recently he released a statement that from now on anyone will not be able to buy Tesla cars using a cryptocurrency.
He said that the reason behind such a decision was that he was worried about the impact of the mining of cryptocurrencies on the environment.
And so in his bid to protect the environment, has taken the decision.
- A large number of cryptocurrencies saw their value diminished between the range of 7% and 22%.
- Shares of Coinbase dropped by 5.4%.
- Ethereum, Cardano, and Dogecoin saw their value diminished by 15% to 20%.
- As per the recent reports by the crypto-trading platform Binance- Bitcoin was trading nearly 21% lower than it’s price, which was recorded 24 hours earlier $34,693.
- From April, the value of Bitcoin is decreasing on a monumental scale, as previously it hit a high of $64,606 per coin.
People’s Bank of China’s Statement on Cryptocurrency
On May 19, 2021, the People’s Bank of China told the financial institutions in their country to refrain from providing any kind of services to digital currencies. The reason behind such as decision was said to be the volatile nature of cryptocurrencies.
This decision directly resulted in the cryptomarket crash and shook the world of crypto users to a large extent.
Along with all of this, it was also seen that now Elon Musks’s tweets were no longer the driving factor behind the fluctuations in the market value of a certain cryptocurrency.
Ashish Mehta, Co-Founder, DigitX, Exlapining The Crypto Market Crash
The Tesla- Musk Factor
When Tesla announced that from now it won’t accept payment in terms of Bitcoin, citing the reason as environmental concerns. As the mining of Bitcoins requires a large amount of electricity, resulting in higher usage of fossil fuels. Which in turn leads to a huge carbon footprint on the environment.
But all of this is not as white and black as it seems, as certain questions can be raised such as. Why didn’t Tesla’s executives took this decision before? As previously also they must be aware of the impact of Bitcoin mining on the environment…
Tesla cars run on the same electricity, which is generated using a large amount of fossil fuels only… so why all of sudden does Musk has concern for the environment?
- The decision taken by the People’s Bank of China did some heavy destruction in the world of cryptocurrency, ultimately resulting in the crypto market crash.
The decision is said to have been taken by the Chinese government to prevent the financial institutions of the country from having any say or power in the world of cryptocurrencies.
- Recently there were also rumoirs that the largest crypto exchange Binance is being investigated by the IRS. Though it must be noted that Binance has been cooperating fully and nothing. Which can incriminate it, has been found so far.
This may seem like a minor reason, but it is still counted among the prominent reasons behind the crypto market crash.
Role of Elon Musk in the Crypto Market Crash
In February 2021, Bitcoin hit a new high, when Tesla announced that it has invested 1.5 billion dollars in Bitcoin. Along with this Tesla also said that it will soon start accepting Bitcoin as a mode of payment.
So when Tesla made this announcement, Bitcoin’s price recorded a record high of $44,795.
Around this time only, Elon Musk made consistent tweets about a new cryptocurrency known as “Dogecoin”. Which resulted in a spike in the value of the said cryptocurrency.
But then Musk took a complete u-turn when he recently announced. That Tesla will not be accepting Bitcoin as a mode of payment, citing environmental concerns.
His decision hugely impacted the price of Bitcoin, as the latter’s market value took a steep dive. So Musk’s inconsistent decisions about accepting Bitcoin as a mode of payment is a big factor behind the recent crypto market crash.
What Will Happen After the Crypto Market Crash?
Bitcoin is nothing less than a phenomenon, as it no expenditure, no authority which can regulate it’s price. It is nothing less than a game-changer in the world of finance.
And since it’s inception, it has appealed to the people, who have heavy investments in it.
But the recent crypto market crash has shows, financial investors. That they cannot be completely dependent upon a single financial instrument. And so to protect their investment, they must consider cryptocurrencies as just another form of financial instrument.
So according to the financial experts in the world of Crypto, if you have invested in cryptocurrencies, then you must not start panic selling.
As the crypto market may have crashed today, but it will bounce back and most of the cryptocurrencies will recover their value.