Why did bitcoin crash suddenly?

 Bitcoin is the most hotspot topic of cryptocurrency. Bitcoin was created in 2009 and since then it got exponential growth. The transactions through bitcoin can be made without a middle man and even without the monitorization of any authority or government. It is a peer-to-peer technology that facilitates the process of instant payments. 

The cryptocurrency got a huge momentum during lockdown and Covid-19 when everything was forced to go digital. Many people saw an investment opportunity in bitcoin and also in other similar digital currencies. Bitcoins were seen as the future of money transactions till they suffered a huge recent drop-down or in other words a total crash.

The value of bitcoin dipped by 40% last week. This “Bitcoin crash” also raised many questions on the investing strategies and possibilities for the near future.

The bitcoin crash occurred mainly due to two reasons;

• China banned digital currencies

China is among the world’s largest economies. Recently, China banned all its financial institutions and companies to use digital currencies. China barred digital transactions. This impacted the roots of the digital currency market deeply. China also stated in its new rules that virtual currencies don’t hold any real value which makes them skeptical to use. This decision not only caused the bitcoin crash but also affected other digital currencies like etherum. 

• Tesla’s decision

China’s decision wasn’t the only stone thrown on the digital currency market. Before that Elon Musk tweeted about a new cryptocurrency called dogecoin which surfaced doubts about the bitcoin in people. After that Tesla also removed bitcoin as a method of payment from its company. This also added more havoc to the digital currency market. Elon Musk has played a very vital role in making the value of bitcoin by his future-oriented and farsight plans. This decision caused more dipping in the value of bitcoin.

What’s ahead?

As many people are facing loss in their investment policies as the value of bitcoin has dropped. The bitcoin crash surely has been a very shocking event for its investors as the market was on constant high profit till now. Though China has banned such currencies even in 2017 this time the rules are more strict. The ban by the largest economy also is a major issue that is not looking resolvable in near future. 

The economical ecosystem has shifted many stones for digital currency. But many investors and economical experts are believing that this dip can be profitable for long-term investments. The bitcoin crash is a state of loss for short-term investors with no doubt. But many financial advisors share common speculation that a dip of nearly 40% in the bitcoin price is dramatic but it is just a short phrase that is beneficial for long-term investments. Crypto is a volatile market and such dips are normal in these kinds of operating markets. It can be an opportunity for long-term investors to buy more assets when prices are very low. Avinash Shekhar, CEO of Ze-Pay which is an India-based cryptocurrency also supports the bitcoin crash as an opportunity for long-term investment.