Of late, cryptocurrencies had already gotten widespread public attention and are now experiencing their latest setback with prices falling. But, is this crash going to scare people away, or should you consider this a good time to buy Bitcoin? The crypto pack was largely led by the pioneer cryptocurrency, as it hit an all-time high of $64,000 in mid-April. A number of industry experts had predicted that premier digital asset would also hit the $100,000 mark in short order. However, it appears that the bullish glow surrounding the premier digital currency is wearing off quickly. After Tesla’s announcement of discontinuing Bitcoin acceptance for its electric sedan, the crypto saw a major relapse.
Since then, Bitcoin’s price seems to have gone into free-fall. This was primarily because of the age-long issue surrounding the huge energy needed for validating transactions. Almost 133.68 TWh electricity is used by Bitcoin annually for verifying transactions. The announcement by Tesla appeared to have startled the broader crypto space and affected it negatively, as more than $880 billion worth of investments were wiped out from the market in a week. The situation had already turned dire before data revealed that Bitcoin traders were staking billions of dollars in put options, with the prediction that the cryptocurrency would continue to free-fall.
Bitcoin has been falling for some time now. On May 17th, the price had reached its lowest when it had gone below $44,000. This was a 22.5% fall from a high of $59,000. But, this was not the end as Bitcoin went below the $40,000 mark soon enough and on 23rd May, Sunday, it hit $34,000 at 1000 GMT. In comparison, ‘Green coins’ such as Cardano seem to be doing a lot better, as they have only shed less than 30% of their value in the same week that Bitcoin shed 43%.
A metric known as the Crypto Fear and Greed Index, which records current sentiment in the crypto space, indicates a change in sentiment regarding Bitcoin in the market. It was previously at 74, which indicated Greed and has now moved to 23, which indicates ‘extreme fear’. Taking into account the latest developments, the analysts at Arcane Research said that the last week had seen a combination of FUD (Fear, uncertainty and doubt) after Bitcoin’s price crash. It was also noted that previously, extremely fearful markets had given rise to solid buying opportunities amidst bull cycles.
The Norwegian research firm also observed that there is a 25% gap in Bitcoin’s spot-market price and the shares of Grayscale Bitcoin Trust. It also stated that since February 2021, short-term volatility had reached an all-time high and the 30-day volatility was now at 4.5%. The company also said that Bitcoin derivatives’ funding rates had gone below 0% twice now. Last week, BTC longs of more than $1 billion were liquidated. Even though it may appear to be a curtain call for the pioneer crypto and the overall market, crypto enthusiasts believe that Bitcoin’s bull-run is going to continue and Jack Dorsey, Square’s CEO is one of these people.