For Bitcoin investors, May has been a stressful month. Last month, the world’s largest Cryptocurrency, Bitcoin, hit a nearly 4-month low. Previously, Bitcoin had dropped more than 50% to $30,066 from its all-time high of $64,895 on April 14. Ethereum, the token tied to the Ethereum Blockchain network, fell about 57% to $1,850, its lowest level since late January.
In this asset class, there were a lot of unknowns. Nevertheless, this has not deterred Indians from investing in this commodity, with more than 10 million Cryptocurrency investors in India as of April 2021. With Bitcoin prices recently plummeting, the Reserve Bank of India declared on May 31, 2021 that bankers cannot use a Supreme Court judgment from 2018 to warn customers against trading in cryptocurrencies because the RBI has not issued any guidelines since 2018.
Speculative trading is not the best way to invest because authorities have yet to issue clear standards that will determine the fate of Bitcoin. The collapse in the Cryptocurrency industry began with Elon Musk’s tweet, in which he declared that Tesla would no longer accept Bitcoin as payment. Due to environmental concerns, Musk indicated that Tesla would no longer accept Bitcoin for vehicle sales. Furthermore, China’s statement prohibiting financial institutions and payment businesses from offering services connected to Cryptocurrency transactions exacerbated the market’s decline.
What should you do if you can’t decide whether to buy or sell?
While investors are choosing to opt for sell-offs owing to the current market downturn and worries, which is undoubtedly unpleasant, Ethereum (ETH) price has risen 1,150% in the previous year, while Doge coin’s price has risen 13,310% in the same timeframe.
Cryptocurrency is here to stay as an asset class, and the prognosis is favorable. We are all aware that Bitcoin is extremely volatile, and investors should exercise caution. It is critical to keep these investments for at least the medium term. Investors are encouraged to invest a lower percentage, which should also be included in the investing basket. Systematic investing based on the investor’s aptitude would yield long-term rewards. However, all investors must keep in mind that rational thinking and comprehension of the technology underlying cryptocurrencies will be critical.
Although Bitcoin is not banned in India, it is still unregulated, which has led to a lot of misunderstandings because there is no governmental body to control it, and the risk of fraud and scams has increased. That is why, according to experts, it is critical to have a complete understanding of the technology underlying this asset in order to make more educated judgments. Furthermore, the infrastructure supporting Cryptocurrency is still in its infancy, since the trading systems that handle digital currencies frequently have technical difficulties.
Why are Cryptocurrency prices continuing to fall?
Some of the recent price movements in Cryptocurrency can be attributed to the failures of firms such as Terra and Celsius. Terra’s stable coin, UST, fell below $1 in value in May, prompting investors to abandon the commodity. Luna, its sister coin, is also dipped.
Here are 3 summarized reasons for continuous dropping of Crypto Price:
Volatility is raging
Bitcoin is matching the NASDAQ, which is down 21 percent this year while Bitcoin is down 22 percent.
Last year, when Bitcoin was valued at between $32,000 and $36,000, many investors jumped into it. A further decline to about $30,000 might spark more selling. Bitcoin is caught in a sideways news cycle, where you’re basically waiting for Wall Street to settle down before seeing more individuals’ confidence in investing.
Mainstream acceptance is delayed
Several occurrences last year highlighted the rising relevance of Cryptocurrency in financial services. More civilian investors purchased Bitcoin through Cash App or Robin hood; an increasing number of companies accepted Bitcoin as payment for goods and services; and El Salvador made it legal tender.
So far, this year has been calmer, with fewer landmarks to record cryptocurrencies rise as an investment and medium of trade.
Investors seeking more secure ground
When the stock market falls, many investors shift their funds to less risky, more stable assets. Some Bitcoin investors are examining other investment possibilities and shifting their money back to the dollar as a starting point before deciding what to do next.
Bitcoin reached a high of $69,000 in November of last year. According to analysts, Bitcoin might fall as low as $30,000 or $25,000 in the next weeks before rising again later this year.
Will Cryptocurrency/Bitcoin prices rise again?
It’s quite difficult to forecast. The recent month’s fall was severe, but crypto is not finished. The industry is not extinct. Prices might skyrocket in the coming month.
The value of Bitcoin is almost as liable to collapse as it is to increase again. Bitcoin’s destiny would almost certainly include much more instability, something scholars believe long-term crypto investors will have to accept.