As many of you know all cryptocurrencies are crashing right now (BTC, LTC, DOGE, ETH, etc.), and many of you may not know reasons as to why. Although nobody can say with certainty due to crypto falls in regards to one factor, we can have a holistic view as to why. So in this thread I will give three factors that I believe could be the cause for the drop in crypto prices (and if you have any other factors, feel free to reply to this thread to help others in the community!)
1) Price Manipulation (Elon Musk & China)
1) Price Manipulation (Elon Musk & China)
It's no secret that Elon Musk has had massive influence over the price of cryptocurrencies, DOGE being the greatest example of his with remarkable growth and even being one of the factors that led BTC going from 16k to it's peak of 60k. Recently, Tesla has sold 10% of its stock in BTC as a way of showing that BTC could be a cash alternative, which caused a drop. It was also suggested that Tesla had pulled out of BTC, which caused another drop. Then we saw when Elon had confirmed Tesla hasn't pulled out, there was a spike in growth.
![[Image: XfOMKTm.png]](https://i.imgur.com/XfOMKTm.png)
China has also recently done some price manipulation, though it is unclear whether it was fully intended. The China Banking Association warned members of risks associated with digital currencies. This is largely credited to the high volatility of crypto currency prices, and this announcement was made when BTC was at 40k, and can be a massive factor as to the massive drop that happened over the last hour. Further more China has also banned financial institutions and payment companies from providing services related to cryptocurrency transactions. I've seen a stat about the 5th greatest holders for BTC being in China, but I am unable to find the source.
China has also recently done some price manipulation, though it is unclear whether it was fully intended. The China Banking Association warned members of risks associated with digital currencies. This is largely credited to the high volatility of crypto currency prices, and this announcement was made when BTC was at 40k, and can be a massive factor as to the massive drop that happened over the last hour. Further more China has also banned financial institutions and payment companies from providing services related to cryptocurrency transactions. I've seen a stat about the 5th greatest holders for BTC being in China, but I am unable to find the source.
2) Market Agents (Human Action)
This may be the most obvious, but is often one of the most overlooked. We usually want to credit some higher entity and group as a scape goat rather than just blame humanity. We have to remember that most people that invested in cryptocurrencies had invested their own money in search for profit, and when they start seeing prices fall they lose confidence. Not everyone has the mindset of holding! So when prices start to fall, most normal people will start to pull out to cut their losses, in fear of losing all their investments completely. That is a problem with high volatility assets, such as crypto. People know just how easy it can boom & how easy it can bust, so they're constantly watching over their investments like hawks. We can see confidence having a sharp drop.
![[Image: Screen-Shot-2021-05-18-at-4.52.40-PM-775...ormat=webp]](https://external-content.duckduckgo.com/iu/?u=https%3A%2F%2Fstatic.coindesk.com%2Fwp-content%2Fuploads%2F2021%2F05%2FScreen-Shot-2021-05-18-at-4.52.40-PM-775x484.png%3Fformat%3Dwebp)
3) Investors Dumping
[font]So a massive interest in bitcoin was it's alternative from US Fiat money. This was due to speculations about hyperinflation due to the FED printing more money (This is not a place for political talk, so I'll not touch upon this other than describing other viewpoints). These same people that also view bitcoin as an alternative are the ones that repent the fact that the United States have moved on from the gold standard, so they put their money in for gold seeing that gold is more stable than the US currency is amidst of the money printing going on. So another cause of the BTC spike was investors putting it over gold, and one factor in the fall of the price is institutional investors are dumping bitcoin in favor of gold. It was a reversal of the trend that drove investors to BTC, now investors are moving away from BTC. [/font]
I hope this has enlightened some members of the community! Just realize that high volatility assets also have a high chance of bursting at times. If you choose to hold, you can see GME profits, sure! But I would advise against holding if you have important money like money for rent, money for your car, etc etc. Just don't be dumb & be a smart investor. I will be updating this thread as I come to new information to make sure everyone is able to be updated.
[Edit #1: Added more to China explanation!]
[Edit #2: Added Investors Dumping section!]
[Edit #2: Added Investors Dumping section!]
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