Cryptocurrencies are unpredictable. The advent of the crypto-industry can be considered to have started from the time when a mysterious person by the name of Satoshi Nakamoto, launched a digital currency called Bitcoin. That was thirteen years ago. Ever since, the cryptocurrency world has evolved in to a technological giant and holds the potential to unlock the next evolutionary stage of the whole economic system.
Bitcoin has been in the news during the past few weeks. Initially, it made it into the news because of the impressive rally it was showcasing on the cryptocurrency charts.
Bitcoin grew by more than 700 percent since March, but the month of December proved to be very significant for the cryptocurrency, as it managed to break all previous records.
Bitcoin, and the whole cryptocurrency industry as a matter of fact, remained dormant for a better part of time after 2017’s crypto bubble crash. The crypto-community was eagerly waiting for any major breakthrough by Bitcoin as they sat in hopes of making profit and recover their investments. Bitcoin broke the major hurdle of $20,000 in December 2020. With this breakthrough. the previous all-time-high milestone became one step closer to its reach. Investors kept on the bullish trend in hopes of maintaining the Bitcoin-frenzy and crossing the ATH value of Bitcoin, and so they did!
Bitcoin recorded its new all-time-high value of above $40,000 in less than a month after breaking its previous record. However, the rate at which Bitcoin grew in value was a clear indication of a bigger catastrophe to come.
They say, what goes up must come down! Bitcoin tumbled down by more than 25% of its value on Monday before stabilizing itself around $32,000. This crash is the latest in the line of crashes that Bitcoin had over the years.
This crypto-bubble burst did not happen as a result of any significant event but seems to be an outcome of a market correction. It occurred due to the mix of financial reasons that links profit-taking and financial gravity. After the Bitcoin rally took the media by storm, and more and more people were getting interested in investing on the high-horse, a warning was issued by the Financial Conduct Authority. They warned the consumers that investing in any cryptocurrency at this time “would be too risky”. And soon after Bitcoin crashed, they labelled it as “the mother of all bubbles” as Bitcoin is highly volatile and can cause people some serious financial harm.
However, FCA did not target Bitcoin directly. They issued the warning keeping the larger cryptocurrency industry in mind which is highly plagues by Ponzi schemes and outright scams. Many firms are established out of nowhere which guarantee high returns and technologies which talk of sky-rocketing price charts, but are in fact fake.
The Bitcoin crash came as an effect when many investors started selling their Bitcoins on a high profit as Bitcoin was rallying over $40,000. The crypto charts collapsed like a house of cards while crypto-whales harnessed huge returns. This crash was also not a very good sight for companies which are directly linked with cryptocurrencies. The stock market experienced a major dip in their stock prices as well on Monday morning.
However, in all honesty, this crypto-crash was not the worst that the market has scene. Bitcoin, and majority of other cryptocurrencies, managed to stabilize themselves at a decent price. Also, this crypto-run has bewildered many big names in the financial markets who came out openly in support of Bitcoin. For example, J.P Morgan accepted that it was their mistake to have under-estimated Bitcoins potential and predicted that the coin can go as much as $146,000 in not time.
This statement from a big giant of the finance industry has grown the popularity of Bitcoin. More and more firms and businesses have started to embrace Bitcoin and its technology. This crash was highly anticipated owing largely to the fact that the growth had been very instant. However, Bitcoin has stabilized itself at a very decent price, and if history is any guide, valuations will recover very soon.