The US stock market struggled amidst the rapid drop in cryptocurrency prices. Earlier this week, a massive drop in Bitcoin’s price-led its value down to $34,000. Several factors affected the crypto-king’s value, including China’s recent ban on crypto transactions and Musk’s statement highlighting Bitcoin’s environmental cost.
As Musk announced that he would discontinue accepting Bitcoin as a form of payment until it shifts to sustainable practices, all that Musk had contributed to BTC’s fame and value was reversed in an instance. Similarly, following Musk’s statement, Chinese authorities highlighted the volatile nature of cryptocurrencies and banned them due to the risk they impose on people’s property and assets. The Chinese authorities also stated that the use of crypto has a negative impact on the established financial and economic order.
The company’s that followed Elon Musk’s steps suffered a drop in share prices as Bitcoin and other cryptocurrencies began to lose significant value. In fact, Tesla itself saw a 4.2% drop in share prices. Alongside Tesla, many other companies saw their stocks take a hit amidst the crypto crisis as well.
Shares in MSTR are down about 60% since February 2021
Michael Saylor, the founder of MicroStrategy (MSTR), doubled down on Bitcoin by purchasing $10 million worth of Bitcoin at an average price of $ 43,663. He continued to tweet that “As of 5/18/2021, we #hodl 92,079 bitcoins acquired for $2.251 billion at an average price of $24,450 per bitcoin,”
Michael Saylor has constantly been in support of cryptocurrencies and has been promoting Bitcoin for a while. The CEO of Binance replied to Saylor’s recent tweet saying ‘Legend.’ The massive drop in MSTR’s shares is because of the company’s dependence on Bitcoin’s value, noticing the crypto’s immensely volatile nature.
To put things in further perspective, now MSTR, which is a publicly listed stock reportedly worth nearly $5bn, depends on Bitcoin maintaining its value above $24,000. It’s no shock that the company’s stocks have seen a massive decline. However, many analysts suggest that Bitcoin will recover in the years to come and might surpass $ 100,000 in value. This remains unknown, and one cannot determine whether or not HODL’ing Bitcoin is a good idea. Even though the future of BTC and other cryptocurrencies is unknown, it’s safe to say that the use of Bitcoin is quite limited as of now.
Crypto analysts believe the fall in crypto values is temporary
Apart from Tesla and MSTR, the crypto exchange operator Coinbase Global saw a sharp decline in value as well. Similarly, mining companies Riot Blockchain and Marathon Digital Holdings were also affected. Though many crypto experts claim that the fall in crypto prices is temporary and will recover shortly, investors are hesitant as they watch crypto-related stocks decline.
On the other hand, analysts suggest that the fall and rise in crypto values is an ongoing process. Bitcoin itself has been fluctuating constantly since its inauguration. There’s no denying that cryptocurrencies are a risky investment; however, analysts suggest that if one plans to HODL cryptocurrencies, the chances of profiting are much higher.