2023-08-21clock7 minutes

Introduction: What’s going on around Bitcoin?

In the recent week, Bitcoin, the most widely recognized and popular cryptocurrency globally, has experienced a decline in its value. However, the most significant downturn occurred on August 20th, when the value of this leading digital currency plummeted by 10% within a matter of minutes. This sudden drop led to the sale of approximately 1 billion USD worth of assets.

Within this blog post, our focus will revolve around exploring the potential factors behind the decline in Bitcoin's price. Subsequently, this downward trend extended to affect the values of other well-recognized as well as less prominent cryptocurrencies. As a result, a bearish sentiment, often referred to as the "red wave," took hold within the market.

China's Biggest development company China Evergrande went Bankrupt

A prominent Chinese real estate firm, known for its global presence in constructing upscale and mid-range residential properties, has faced a situation of bankruptcy.

The corporation submitted a corresponding application through the Manhattan Stock Exchange in the United States, officially declaring its bankruptcy. This action is believed to have wielded a substantial influence, not solely within its own sector, but also on the broader global economy. As a result, there was a noticeable decrease in stock values, and even crypto assets did not remain untouched by this phenomenon.

Elon Musk’s SpaceX Sold $400 million worth of Bitcoin?

Rumors have circulated within the cryptocurrency community indicating that SpaceX, the space venture led by the notable crypto enthusiast Elon Musk, and a figure some speculate might be the anonymous Satoshi Nakamoto, has liquidated its entire Bitcoin holdings. This move translates to an approximate total of $400 million.

The reports concerning the full divestment of Bitcoin holdings remain unverified, and certain experts are cautious about attributing the decline in Bitcoin's value solely to SpaceX's actions. The noteworthy drop in Bitcoin's price raised concerns, and various other factors were evidently at play in this scenario.

These factors encompass actions by entities apart from SpaceX, particularly significant Bitcoin holders often referred to as "whales," who engaged in selling the asset in the market. Additionally, there was a prevailing pessimistic sentiment among smaller and medium-sized traders, leading them to also offload the cryptocurrency within the market.

Furthermore, crypto specialists point to a precedent involving Elon Musk's other venture, Tesla, in the previous year. During that time, Tesla made a substantial quantity of Bitcoin available for sale, yet the market did not respond with a comparable downturn in cryptocurrency value. This instance suggests that the influence of SpaceX should perhaps be regarded as less significant in the context of the current situation.

$1 Billion worth of Bitcoin sold

Assisted by a range of crypto exchanges, investors participated in transactions involving approximately $1 billion worth of Bitcoin within the past 24-hour span. This trading activity engaged around 167,000 individuals who were actively trading Bitcoin.

Besides Bitcoin, Ethereum was also subjected to liquidation, experiencing a notable 10.5% reduction in its price. The most substantial liquidation event took place on Binance, where a staggering $56 million worth of Ethereum was made available for sale.

This statistic provides insight into the prevailing anticipation among traders for a price decline. This sentiment, coupled with their proactive selling actions, led to a shift in trading outlook. Consequently, the price of Bitcoin witnessed a decrease as a result.

Summary: Fall of Bitcoin

Bitcoin's current value stands at approximately 61% lower than its historical peak. Additionally, this trend has been mirrored by other cryptocurrencies and the broader crypto market. As an example, the second most prominent digital currency, Ethereum, has undergone a substantial devaluation of around 66% in terms of its price.

The downtrend also extended to Ripple, Litecoin, and Dogecoin, signifying a collective decline within the crypto market. Given the volatile nature of the cryptocurrency domain, foreseeing its future trajectory is a challenging endeavor. For investors, staying consistently updated and remaining attentive to news regarding the activities of major investors, diverse crypto enterprises, and the like, becomes paramount.

Conversely, a decrease in price can be viewed as an opportunity to acquire specific cryptocurrencies at a discounted rate. As evident from crypto's historical patterns, each downturn has historically been succeeded by a positive surge and an upward trend. It's a consistent trend that has been observed in the past, indicating that Bitcoin, despite its current decline, is likely to rebound and regain its value in due course.

Note that it is not financial advice!