Bitcoin began to bounce back this week after falling to around 50% of its record high on Sunday. The latest dip came into play when the Chinese regulations tackling crypto miners forced them to halt their operations. But there was an upward trend on Tuesday morning that showed Bitcoin could return to above $40,000. The second-largest cryptocurrency, Ethereum, has also jumped up in price since the Sunday slump. But, like Bitcoin, the price has still overall dropped.
On Monday, major Chinese crypto exchange Huobi suspended its crypto mining and other trading services to new clients. Around 70% of the mining supply is created in China through different exchanges, so this added to the drop at the weekend. It is due to their government not believing cryptocurrencies are legitimate to do business with. However, residents in the country are still allowed to own cryptocurrencies.
Bitcoin accounts for more than 45% of the global cryptocurrency market. So when the price fell to as low as $32,000 on Sunday 23rd May, it added another blow to a week already inundated with dramatic financial losses. However, by Sunday evening, the price was steadily rising again. It began to recover some of what was lost that weekend. This increase has encouraged other cryptos to follow suit, like Cardano, Ethereum and the meme-inspired crypto Dogecoin, both rebounding on Monday.
At the start of this week, the crypto market rebound did have some help from Elon Musk’s comments. Although Musk recently stated that Tesla would no longer accept Bitcoin as a payment for their electric vehicles. On Tuesday, he said he has been discussing with Bitcoin miners about working on renewable energy solutions. In addition, there is the news that hedge fund billionaire Ray Dalio has invested in Bitcoin, helping to increase its value.
Last week has shown individuals and potential crypto investors how volatile digital currencies are. As it stands, cryptocurrencies cannot replace the dollar, regardless of how Bitcoin and other popular cryptos represent a cheaper and more efficient way of completing transactions.
Only a very small amount of people use Bitcoin to buy goods and services, so there is a long way to go before it is recognised as a legitimate currency. And with the recent crypto crash, Bitcoin has lost credibility and reliability for many individuals who invested their money into it.
Bitcoin has a history of making a comeback. In 2020, it was in its bull run. The price gradually climbed as the year progressed. When it got to December, the price hit around $19,000. It then took a sharp increase in value to reach its all-time high in April of approximately $63,200.
As Bitcoin bounces back, there are predictions on the price reaching new records by the end of 2021. But until then, individuals will continue to monitor its recovery in the market.