AFTER THE MINI CRASH
Why did it happen? And what now?
Several experts, analysts and crypto bloggers talked about how volatility faded in the crypto market. Since Thursday they are not talking about that. Volatility is back. And not the way that crypto investors hoped it would reappear. As fxstreet.com writes:
“Bitcoin crashed not only below $6,000 but also below the previous 2018 low and hit $5,200, the lowest level since October 2017.”
There are several explanations, the most frequently mentioned and most obvious being the Bitcoin Cash hard fork. When last year Bitcoin had its hard fork and Bitcoin Cash was created, it had a totally different effect on the market and crypto prices exploded, although the hard fork was only one of several factors. But it definitely had a positive impact. We can’t say that about the Bitcoin Cash hard fork, unfortunately.
That hard fork is one of the explanations behind the recent mini-crash in the crypto market. The other factor that may have influenced the market mood is Cristine Lagarde’s announcement. She is the Managing Director of the International Monetary Fund. Lagarde suggested, acknowledging the significance of crypto-currencies, that central banks should consider issuing their own crypto-currencies. As Yohay Elam, analyst, comments on it:
“This is not the vision that cyber-punks had in mind when Bitcoin was conceived. Having government controlled and distributed digital coins may make the independent and decentralized ones obsolete.”
The third possible explanation is that investors’ patience is running out. Bitcoin’s volatility became quite flat nowadays, and everyone has been just waiting and waiting for the SEC to finally give the green lights to a Bitcoin ETF. So, when prices started to drop a few days ago, it may have been the last straw for a lot of investors. It may have happened.
There must be other factors, too, and by the time we hear about what really happened and why, it’s already history.
On Friday we could see some recovery. The Saturday average however showed a decrease of the same rate. Bitcoin Cash seems to be the hardest hit of all coins. Bitcoin recovered 1.35 % on Friday and lost about the same from its value on Saturday. A complete recovery, as certain analysts are predicting, could take “weeks or months”.
BCH continued to fall on Friday and lost another 8 percent of its value. All the other altcoins made gains after the Thursday crash.
By Friday, market capitalization climbed back to $184 billion but by Saturday morning another 2 billion was lost from the total value of the crypto market.
Bitcoin’s value is at $5,528, but Bitcoin Cash started Saturday with another plunge, and at the time of writing this article, it stands at $388.82.