On Wednesday, the price of Bitcoin plummeted as low as $30,415, according to data from CoinGecko. The vast majority of altcoins followed the trend as well, with as much as $500 billion wiped off the entire market in less than a day.
Many people blamed the sell-off on news of “yet another ban on Bitcoin in China,” though that isn't quite what happened (and many mainstream media outlets misreported that news). On Tuesday, a group of Chinese banking and payments associations merely reiterated the same rules (and warnings) that have been in place since 2017, and China's central bank re-shared their warning on social media.
Tesla and SpaceX CEO Elon Musk arguably kicked off the bearish streak for Bitcoin last week when he suddenly rescinded Tesla's acceptance of Bitcoin as payment, citing environmental concerns. Musk continued to tweet criticisms of Bitcoin over the next few days, while touting Dogecoin as a potentially more sustainable alternative.
This massive sell-off inevitably drew fresh waves of crypto criticism from legacy media and financial institutions, allowing Bitcoin skeptics to take a victory lap.
Luis de Guindos, vice president of the European Central Bank, said that cryptocurrencies are not “a real investment.” In an interview with Bloomberg, de Guindos argued, “This is an asset with very weak fundamentals and that is going to be subject to a lot of volatility.”
Cryptocurrency markets took a brutal pounding on Wednesday as Bitcoin fell over 30% to around $32,000, and other currencies, includingEthereum and Dogecoin, fell ever further. The recent carnage means that more than $500 billion in value has been vaporized since the crypto market's peak.
Now investors are looking for answers—not surprising given that crypto holders lost more than a third of their wealth overnight. But while it's tempting to seize on a single explanation for the meltdown, the rea...
But amidst the chaos, members of the crypto community remained mostly unfazed.
Nic Carter, founding partner at Castle Island Ventures and co-founder at Coin Metrics, framed Bitcoin's volatility as an “endemic feature of the asset class," reflecting its future adoption trends. He also believes that while Musk’s recent comments on Bitcoin played a role in the latest crash, “this is certainly not the sole reason.”
"Volatility is an endemic feature" of Bitcoin, says Coin Metrics co-founder Nic Carter.
Danny Scott, CEO of UK-based cryptocurrency exchange CoinCorner, agreed that newcomers could be scared off by witnessing their first dramatic dip in Bitcoin’s price. However, “this is normal for a bull run,” he tweeted. “Fundamentals have not changed. Infrastructure building has not changed. Bitcoin becomes stronger from these events. Focus on the long term, not the short."
Meltem Demirors, chief strategy officer at CoinShares, spins the recent crash as a positive long-term development. “It’s been really frothy," Demirors told CNBC. "There was a lot of leverage in the markets." She's confident that the correction is “healthy” and that “a pullback is normal in crypto.”
Cathie Wood of ARK Investments, a prominent Bitcoin believer (whose firm has also defended Bitcoin's energy use) took the opportunity to buy more shares of two of the biggest Bitcoin-associated stocks: Coinbase (COIN) and Tesla (TSLA).
By Thursday, Bitcoin had begun to recover from yesterday’s crash, changing hands around $40,000 at press time.
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The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.
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