Cryptocurrency holders all across the world are in a panic as the world’s largest cryptocurrency (Bitcoin) tends to undervalue. On May 19, 2021, Bitcoin tanked nearly 40% from its all-time level to the US $31,000, which was last seen in February 2021. In May, Bitcoin was trading at the US $55,000. Not only Bitcoin but other cryptocurrencies like Ethereum and Dogecoin also have fallen by 40 percent and 45 percent respectively. Several experts blame China’s recent action against the crypto and Tesla CEO Elon Musk’s tweets.
Shivam Thakral, CEO of BuyUcoin, says that both Elon Musk’s tweets and China’s action are the reason for the drop in Bitcoin price. He also added to his statement that “Any knee-jerk reaction to China’s action should be avoided. Dow Jones and major indices are down too.”
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China’s Action and Elon Musk’s Tweet
Earlier, China has banned payment companies and banks, and other financial institutions from offering services concerned with cryptocurrency transactions. Also, it warned investors about high-risk crypto trading.
If you are a crypto holder, then you might be following one Twitter account — Tesla CEO. However, Elon Musk made a tweet saying, “Tesla will no longer accept Bitcoins started the sell-off in the crypto market.” However, he made another tweet clarifying that he still strongly believes in crypto, but it does not seem to ingrain Bitcoin buyers/holders. Since then the Bitcoin price begins to fall.
Though, in the markets like crypto or any other volatile markets, dropping in the price of a share looks dramatic, as per the industry experts.
What Avinash Shekhar, Co-CEO of ZebPay Says?
Avinash Shekhar, Co-CEO of ZebPay says that such corrections take place because short-term traders making profits. Long-term investors say it as lower prices a buying opportunity, just like the MicroStrategy did. He also said that technical analysts will see this as a test of the support level around $40,000.”
In April 2020, the cryptocurrency market was at its peak of all time. The Bitcoin price towering 10 times from around $6,000 to nearly $60,000. The dip in the cryptocurrency market offers investors buying Bitcoin opportunity, says Thakral.
China Banned Financial Institutions From Helping Cryptocurrency Businesses
As we have said above, China bans several payment companies and financial institutions from rendering services for cryptocurrency transactions. Not only this, but it has also warned investors about high-risk crypto trading.
This is China’s latest attempt to put a stop to expand the digital trading market. With the ban, financial institutions like online payments channels and banks are restricted to offer services like registration, trading, clearing, and settlement, etc to cryptocurrency holders.
It has been said in a statement that cryptocurrency values have plummeted and soared, and speculative cryptocurrency trading has rebounded, disrupting the normal financial as well as economic order.
In addition to financial institutional services, China has also banned initial coin offerings and crypto exchanges. With this ban, the institutions may not be able to offer trust, saving, or pledging services which are concerned to cryptocurrency, nor issue financial product, as per the statement.
However, this is not the first move made by China against cryptocurrency. Earlier in the year 2017, it put a stop to its cryptocurrency exchanges, dyspnoeal a high-risk market that was holding nearly 90% of the world’s bitcoin trading.
After this, in June 2019, the Chinese bank named “People’s Bank of China” released a statement stating it would out shut down the accessibility to all national as well as foreign cryptocurrency exchanges and Initial Coin Offering websites. They said that the decision was made in order to clamp down on every sort of cryptocurrency trading and put a ban on foreign exchanges.
Dogeco Coins – Dogeco is a new online money transfer service created in the shape of a cross between PayPal and Bitwage. Dogeco is meant to be used in place of the conventional PayPal. Unlike other Internet payment methods, users will have their account balance automatically converted to the doge coins equivalent on each transaction. However, dogecoins are not backed or endorsed by any financial institution and are not issued in the same way that any conventional currency is issued.