Heavy Price Correction Hits the Market
The price of BTC and other digital assets faced a decline recently after days of one of the biggest crashes in the crypto market over the years.
In just a day, the leading digital asset per market cap saw an 11.3% decline with a 29.7% drop on a weekly close. Currently, the asset is trading at $33,320 at the time of compiling this article. On a weekly range, ETH plunged 44.2% after seeing 11.8% in just a day. Several DeFi tokens, including the native tokens for Uniswap, Sushi, Curve, UMA, and Aave, saw a price decline of more than 50% in the previous week.
In April, Bitcoin recorded a new all-time high of $64,804, while ETH rose over $4,300 on May 12. The swift change in people’s sentiment has led to speculation in whether the entire market has entered a bearish phase.
Several selloffs hit the market in the past couple of days, and it reached its peak last Wednesday when Bitcoin saw over a 30% crash in price, setting the entire market on a huge decline. The dip came after the three self-regulatory associations in China reaffirm the stance of the country on cryptocurrencies. In the statement, they reaffirmed that the ban in crypto placed in 2013 and 2017 that prohibit financial and payment institutions from ICOs (Initial Coin Offering sales) and other crypto services still stands.
The crash on Wednesday was recorded as the biggest price correction and retracement since March 2020, when the market fell because of the COVID-19 pandemic. After the dip, the market went down after the news of the United States Treasury requested that businesses with more than $10,000 worth of crypto should report their transactions to the Internal Revenue Services (IRS). If implemented, the new ruling would be effected in 2023.
The state council of China then, in a meeting hosted on Friday after the previous ban statement, vowed to crack down the mining activities of crypto, Bitcoin especially.
The doubts around the market are not only caused by the regulators. The Tesla and Space X CEO, Elon Musk, contributed to the price tank of BTC after announcing that Tesla Motors will stop accepting payments in Bitcoin. He also mentioned his concerns about the environmental impact of asset mining activities. In addition, Pope Francis urged everyone to be careful of technology that uses fossil fuels that are very polluting, making reference to Bitcoin.
On a short-term basis, over a trillion dollars has been wiped off the market. But long-term holders are still quite optimistic that the bull cycle will continue, which could create huge highs soon.