Is Bitcoin Crashing?
In the volatile world of cryptocurrencies, Bitcoin remains a symbol of innovation yet is still met with frequent speculation from many. The dramatic price fluctuations often lead to headlines proclaiming a crash or a record-breaking boom. Currently, the question on many investors’ minds is, “Is Bitcoin crashing?” To answer this question, we need to consider the multitude of factors that impact the market value of Bitcoin as well as the broader economic impact. Keep reading to learn more.
Bitcoin History
Since its inception in 2009, Bitcoin has confused and excited people as the world’s first cryptocurrency. Since then, the cryptocurrency has undergone numerous cycles of rapid price increases followed by corrections, which we’ll discuss more below.
For example, after reaching nearly $20,000 in December 2017, it experienced a significant drop over the following year. However, in 2021, it shot back up, surpassing $60,000 for the first time. This pattern highlights the volatility of Bitcoin showing both its potential for downturns as well as its ability to recover.
Breaking Down Bitcoin’s Volatility
As we've established, Bitcoin's volatility is a well-known fact. This volatility is influenced by a multitude of factors, each playing a significant role in shaping the cryptocurrency's market value. These factors include overall market sentiment, regulatory news, technological advancements, and macroeconomic trends. Unlike traditional stocks, Bitcoin operates in a relatively unregulated environment, which can lead to price movements triggered by news or trades. While the Securities and Exchange Commission (SEC) approved the first exchange-traded funds that held Bitcoin earlier this year, it's important to note that Bitcoin itself is not regulated by the SEC. The SEC's jurisdiction is limited to investments and derivatives related to Bitcoin and the oversight of the issuance and sale of digital assets.
Recent Bitcoin Market Trends
To answer the question of is Bitcoin crashing, investors must look at the recent market trends. The price of this cryptocurrency can be influenced by various elements, including but not limited to institutional adoption or rejection, regulatory landscape shifts in different countries, and broader economic behavior that impacts investor behavior. For instance, announcements of countries banning or heavily regulating Bitcoin can lead to rapid declines in price, which, for cryptocurrency newcomers, can make it seem like the coin is crashing.
Corrections vs. Crashes
Within the financial sector, a crash is typically seen as a sudden and significant decline in value, which, more often than not, leads to market panic. However, many of the declines that investors can see with Bitcoin are not crashes but corrections. Corrections are natural market movements that readjust prices after a rapid increase. Corrections can be healthy for the market as they prevent bubbles and provide new buying opportunities for investors. These corrections are temporary reversals, and a good rule of thumb to help you determine if it's a crash or correction is to determine the percentage of the overall value and the amount of time. Corrections are losses between 10% and 20% over the course of a few months, while a crash can far exceed 20% and happen in just a few days.
Factors Influencing Current Bitcoin Perceptions
There are numerous factors that influence current Bitcoin perceptions, but some of the most notable include the following.
Media Influence
The number of pieces and overall sentiment on media stories about Bitcoin can significantly impact the overall cryptocurrency price. Negative news can lead to fear or make people wonder is Bitcoin crashing, which can drive the price down temporarily.
Technological Advances
Developments such as blockchain technology developments and improvements, such as increased security measures, or the introduction of new financial products, such as Bitcoin ETFs, also play a crucial role in helping investors determine if and how much they want to invest.
Institutional Investment
The investment or divestment of institutional investors can lead to significant fluctuations in the Bitcoin price. Investments from major institutions are made by a team that conducts a thorough analysis and creates long-term predictions of the economic value, which many individual investors use as guidance for their personal investment planning and strategy.
Social Media
Social media amplifies public sentiment, which can cause rapid and sometimes volatile shifts in Bitcoin’s price. Positive trends on social media can attract new investors and increase the Bitcoin price, but negativity on various platforms can lead to pessimism, leading users to sell off their stock.
The Impact of Global Economic Shifts
Bitcoin is used worldwide, so global economic shifts can also play a role in its overall valuation. Economic downturns, geopolitical uncertainties, and shifts in monetary policy in major economies can increase its appeal or be used as a method to dissuade users from investing. If you ever start to wonder is Bitcoin crashing, be sure to evaluate worldwide conditions to help determine if it’s a crash or a correction.
Is Bitcoin Crashing?
The U.S. Federal Reserve recently committed to maintaining interest rates on Bitcon for 2024, which can lead to a resurgence of the cryptocurrency. Additionally, with positive U.S. employment data showing a decline in jobless claims, Bitcoin can have a great year in 2024. While there is no way to predict if Bitcoin will crash at some point this year or undergo a correction, as of right now, it’s a great time to invest.
Never Again Wonder Is Bitcoin Crashing with Pelicoin
So, is Bitcoin crashing? As we’ve discussed throughout this piece, there is no straightforward answer. While cryptocurrency experiences volatility, not every downturn is a crash, so it’s essential to stay educated when investing. By educating themselves, investors can better navigate the market for highs and lows. As with traditional investing, remaining balanced and understanding the risks are essential. Whether Bitcoin is crashing, correcting, or thriving, countless influencing factors exist.
To remain updated on all things Bitcoin and help strategize your investments, be sure to read our blog. And if you want to invest more while the market is trending upward, find a Pelicoin ATM near you. Our ATMs are easy to use, safe, and accessible, making investing in Bitcoin a breeze. However, if you do have any questions, check out our FAQ page or contact us, and a member of our team will be happy to help.