While the digital commerce scenario took a major boost in 2020, this year everyone is biting their nails with the ever-falling rate. With a nearly 40% drop in the price of bitcoin from its all-time high, it shows the volatility that comes with trading in these markets.
To understand why the price of Bitcoin is dropping, let’s understand how it works. This digital currency is not affiliated with a bank or any government. It allows users to spend money anonymously and the coins are created by users who ‘mine’ them giving computing power to confirm the transactions of other users. In simple terms, bitcoins are lines of computer code that are digitally signed as they travel from one owner to another.
The trend so far suggested upward growth, peaking at nearly 47.3 lakhs in April. However, due to the fallacies in the international market, Bitcoin has been experiencing a recession for a while now. Find out what factors are influencing Bitcoin prices to increase its size:
China’s ban on cryptocurrency transactions:
With warnings issued for speculative crypto trading, China has imposed a ban on all institutions that provide services related to conducting crypto transactions. Due to the flourishing of the digital commerce market and the restrictions in the government regulatory environment that have slowed the global investment scenario, the value of these cryptocurrencies, particularly bitcoin, is experiencing a decrease in the line of the graph.
Elon Musk’s famous comments:
A full cryptocurrency supporter, Elon Musk announced in February that Tesla had invested $ 1.5 billion in Bitcoin and in March, Tesla began accepting payments in Bitcoin.
Now you can buy a Tesla with Bitcoin
– Elon Musk (@elonmusk) March 24, 2021
However, recently, the CEO tweeted that the company may be considering selling its cryptocurrency holdings, leading the digital trading market on a wave. Starting with May 13, in which Elon tweeted that he will no longer accept bitcoins for car purchases, prompting a 17% decline in Bitcoin.
Tesla and Bitcoin pic.twitter.com/YSswJmVZhP
– Elon Musk (@elonmusk) May 12, 2021
His change in stance on Bitcoin has triggered the movement in cryptocurrency prices in the last month and has been a great pressure on the price drop.
Government regulations to win the faith of investors and safeguard their money would reduce the volatility that Bitcoin continues to represent. A thorough investment plan and conducting a well-researched analysis before investing in any cryptocurrency is a must for an investor when making informed decisions.