Why has Bitcoin dropped so much (Why has Bitcoin dropped so severely)?
Why has Bitcoin dropped so much? According to Bitcoin reports, Bitcoin has exper
Why has Bitcoin dropped so much? According to Bitcoin reports, Bitcoin has experienced a significant drop in price this year, but market sentiment has not been affected. According to CoinMarketCap data, more than 800 million US dollars have been stolen, with a total value of about 1.5 billion US dollars, indicating that investors have begun to turn to digital assets. However, in recent weeks, the total market value of some cryptocurrencies has experienced a sharp decline, and the price of Bitcoin has also plummeted. Why has Bitcoin experienced this situation?
Why has Bitcoin dropped so severely?
Bitcoin has been in a sideways trend since June and has fallen below $3,000 after experiencing nearly three months of turbulence. There are two main reasons for this recent drop: firstly, the US government has taken action against Bitfinex, a cryptocurrency exchange, to crack down on illegal fundraising activities. Secondly, the grayscale trust premium rate has risen to near historic lows. Thirdly, the global financial market is generally concerned that the Federal Reserve may engage in quantitative easing (reducing bond purchases), so investors have turned their attention to safe-haven investment products such as gold and Bitcoin.
If this year is the year of digital currencies, then the bull market in the cryptocurrency market is bound to usher in a surge by the end of 2021. However, it cannot be ignored that as regulatory measures are introduced by various countries, the price of Bitcoin may plummet significantly.
Firstly, the recent announcement by the US Securities and Exchange Commission to amend the “Anti-Money Laundering Law” means that for cryptocurrency holders, it is not only an act of protecting themselves from fraud and manipulation, but also an opportunity to provide protection for other high-risk investment products. It can prevent losses from some malicious participants. In addition, the US Commodity Futures Trading Commission has also stated that it may allow more people to buy and sell cryptocurrencies at cheaper prices in the coming weeks, and it may become a safe choice for trading stocks or bonds. However, if this situation continues until the end of this year or early next year, does it mean that Bitcoin will reach $20,000 in 2022? In fact, from a historical perspective, when BTC starts to experience similar situations, it means that institutions in this field are gradually entering, and they need to be more cautious in their approach to Bitcoin and its related projects. Meanwhile, considering that there are still many unrecognized companies in the entire industry, such as PayPal, MicroStrategy, and even some traditional banking giants entering the cryptocurrency market.
On the other hand, many cryptocurrency exchanges currently disclose user address information publicly, and these accounts can basically be accessed anonymously. This has caused some problems. For example, some exchanges cannot confirm the identities of users. Some websites only display the real names of a small number of individuals, while others directly label their accounts and passwords. Of course, many exchanges are also unclear about the source of their funds.
We know that in the first five months of 2020, a large number of customers used cryptocurrencies on most trading platforms. However, when cryptocurrencies are used as a means of value storage, they often encounter various problems, especially frequent hacking incidents in centralized trading platforms, which further increase the cost of hacking attacks and result in a large amount of cryptocurrency loss, affecting people’s daily lives.
In the past few years, more and more exchanges have discovered this point. For example, well-known platforms such as Binance and OKEx have launched their own decentralized token trading functions, and even old platforms such as OKEx have also launched their own trading functions.
However, although many people are now expecting Bitcoin to rebound like in 2017, in the past two years, the price of Bitcoin has been relatively stable and has not experienced significant ups and downs. This is mainly due to various factors such as market demand, investor sentiment, and regulatory policies. Therefore, the future trend of Bitcoin remains uncertain.
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