Bitcoin: From China to Elon Musk, The Factors that Fueled Crypto’s Volality
Roller coaster already seems like a light term to describe Bitcoin moves. Over the course of these months, the world’s most famous cryptoactive has had very strong moments, such as a drop of 31% on May followed by a rise of 33% just one month later. Compared to the historic high so far (US$ 63,300, reached on April 15), the drop to the week’s low (on Wednesday, 19) was 45%.
What Explains this Coming and Going?
First, it is important to remember that Bitcoin and cryptoactives in general are still at the beginning of their history. It is and will continue to be for some time a period marked by a lot of uncertainty regarding the usability, acceptance and fair value assessment for this type of asset.
That 45% drop was quick and intense, but it wasn’t the biggest tumble Bitcoin has taken between highs and lows throughout its history, either. The record “blood bath” to date was between November 30, 2016 and January 14, 2016, with a devaluation of almost 87%.
This time, the main reasons for volatility have a name — some have Twitter accounts; others, geography. Let’s go to them:
- Elon Musk
Always the controversial founder and “Technoking” of Tesla, late last week, he warned that his electric car maker would no longer accept payment in Bitcoin because of environmental damage from the mining process.
Another statement made the situation worse, implying that, in addition to not accepting it as payment, Tesla would dispose of its billion-dollar financial reserve in BTC (something that, according to Musk, was not done).
- China and Regulation
It wasn’t enough for Musk to put the “Bitcoiners” (they call themselves that way) to think about the environment, the Central Bank of China threw a bucket of cold water on crypto enthusiasts by reiterating , that the country’s most financial institutions world’s populous people cannot accept digital tokens as a form of payment.