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Analysts, enthusiastic crypto investors and even the general public would have heard tell of the crash in the value of many of the most notable and well known crypto currencies. It would seem that Bitcoin, Etherium and even Dogecoin has had a string of bad luck, Billionaire Mark Cuban refers to it as the “Great Unwind”. But is all what it seems?
Due its decentralized nature crypto currency has the potential to replace the concepts of centralized finance and central banks which has appealed to great many investors, but with these potential advantages comes a great many risks. As the field is relatively modern not many understand the intercut system that makes crypto currency and block chains work. And many governmental officials go on to point out that since the governments have no control over this realm there is little that they could do if an unfortunate investor’s information is to be leaked as a result of a data breach. Due to the absence of laws many governments constantly advice individuals to refrain from such trades. But recently some governments have decided to take a more proactive approach and this has resulted in a plummeting of prices.
The United States of America under the Biden administration has expressed that it intends to crack down and attempt to regulate these trades and requested the people to inform the government of any crypto transactions that exceeded $10 000, this is common for money transactions in the US where the IRS is informed of any transactions that exceed $10 000. China and Turkey also joined in the fight against crypto as the nation’s limited activities investors are allowed to carry out via crypto currency. A further blow to prices came when Tesla CEO Elon Musk announced that Tesla purchases through crypto would no longer be allowed.
Bitcoin, the world’s number 1 crypto currency saw its value drop by 50% from its peak value of $64,829.14 in April to $31.179 and Dogecoin dropped by 60% from its high of 74.04 cents to currently change hands at 29 cents. However the question remains is this dip the beginning of the end or is there room for recovery?
It must be noted that crypto currency is volatile in its very nature due to its decentralized nature, prices fluctuate more frequently than those of paper currency. According to Dow Jones Market Data in the past 11 years there have been 230 instances where the price fluctuation was more than or equal to 10% and over 750 instances where the price change was over 5%. Therefore only time and a combination of external factors would determine if crypto currency would once again return to its higher earnings.
