It’s the cold shower for many cryptocurrency enthusiasts. After five months of development in a very optimistic market, prices reversed and corrected more than anything Bitcoin, Ethereum or even Cardano had seen recently.
Bitcoin was able to fall 20% to $ 34,200 in less than 24 hours, reaching levels equivalent to what it was before the very influential announcement of Tesla’s $ 1.5 billion purchase of bitcoins. A level that takes us back to early February. Ethereum also lost up to 27%.
Overall, the total capitalization of all digital tokens has fallen by 28% in the past 24 hours, measures CoinMarketCap. Its total weight is no more than $ 1,460 billion, while it had largely exceeded $ 2,000 billion for several weeks.
Among the other popular cryptocurrencies that fell sharply on Wednesday: Dogecoin, XRP and Cardano by 28%, Binance Coin by 32% and Polkadot by 36%. The volumes currently traded are peaking and multiple platforms are affected, including Coinbase, which is currently unavailable to many users.
Which elements have to be considered?
Bitcoin has soared to over $ 50,000 since mid-February. Although it managed to hit records above $ 63,000, more and more analysts were considering a correction that marked the end of a “bull run” cycle that included everything from cryptocurrencies to popular prank tokens like Dogecoin or SHIB.
The correction marked its debut very clearly with the recent announcement from Tesla and Elon Musk last week. Regarding Bitcoin, the automaker preferred to remove the added payment option for environmental reasons. The crypto community had reacted somewhat to the market and the following tweets from Elon Musk did not help.
Even so, it would have been almost comforting to know that the 20% decrease in the past 24 hours was caused by individuals and organizations other than Elon Musk and Tesla.
In China, three banking and payment organizations released a statement on Tuesday banning companies from providing services related to cryptocurrency transactions. A second deterrent campaign after 2017 that has since been forgotten.
Apart from Turkey and the takeover of cryptocurrencies by the President of the European Central Bank, Christine Lagarde, the market had not seen any notable attacks from regulatory authorities for some time.
Finally, maybe it couldn’t go on. Elon Musk had become the main reason for the volatility of cryptocurrencies. A situation that would not have served anyone in the long term. As usual, the market is not seeing very stable support and we cannot estimate the extent of the current correction.
It was no longer possible for one person to rain and shine on a multi-trillion market in which many people invest their savings and which aims to revolutionize an entire economy. A new cycle is important.