Xiao Lei: 3 Main Reasons of the “Unreasonable” Bitcoin Price Crash
Cryptocurrency markets experienced a havoc in the past few days. Bitcoin, the uncrowned king in the crypto world, has fell as much as 30% over the past two weeks, while other major tokens are all suffered a lot. For instance, Ethereum, the second largest cryptocurrency in market cap, has almost fell 35% in two weeks. The whole crypto market was covered by dark clouds.
It becomes extremely frustrating to the investors as there is no explosive bad news that causes this downturn.
Under this condition, Xiao Lei, a famous financial analyst in China, has listed three main reasons for the recent Bitcoin crash:
First of all, Bitcoin is mired in the bear market, it would be hard to maintain the existing price without fundamental bullish news. As Bitcoin cannot create profit on its own, if no one is willing to buy and hold, the market sell-off is inevitable.
Secondly, the blockchain technology has completed its mission in pushing Bitcoin price to surge. Since 2016, the rise in Bitcoin price should owe to the rise of blockchain technology. Nowadays, as blockchain becomes a fundamental application technology, all the developers are working on how to use this technology to improve the traditional internet and bring out more blockchain-based solutions, in order to gain profits and cash flow in the real world, instead of competing for the dominant financial power.
As thus, the revolutionary will of blockchain is reduced. Meanwhile, the privacy of blockchain assets also faces new challenge. In this case, the demand for stable coins has soared, while Bitcoin and other cryptocurrencies’ attraction have been weakened due to their volatility.
Which means the initial group that has gained huge profits from Bitcoin trading market, is trying to homogenize the crypto market with the traditional market, in order to maintain their interests. Investors are transferring to the traditional assets.
Finally, the recent civil war takes place in the hashing power market, as well as the ambitious procedure of mining hardware manufacturers’ IPO process, for example, Bitmain and Canaan, which makes the upstream industry in Bitcoin ecosystem to face strong pressure.
Xiao concluded that, these issues mentioned above cause the “no reason drop” of Bitcoin. Some investors may feel difficult to understand this and do not know what’s going on. Actually, its quite normal, just like market crashes take place in other investment areas.