Just 6 weeks ago, Bitcoin was reaching a new all-time high. Yes, in mid-April, Bitcoin was comfortably above $ 60.000 and was exploring territory of up to $ 63.000.
How much does a 6-week difference count in the world of cryptocurrencies?
Today, Bitcoin is worth nearly half, which is around $ 34 at the time of writing. It's close to a 44% drop.
But this is not just about Bitcoin. Just 2 weeks ago, Ethereum was at its all-time high, hitting the quotation of $ 4.180 on May 11. Today, those same coins are worth around $ 2.200, a 43% slip.
Litecoin has lost 55% since May 9. Same for Ripple, which was worth $ 18 on May 1,70. Today it is at 89,8 US cents, a drop of nearly 50%.
And the popular Dogecoin is currently trading at 29,7 US cents per coin after climbing as high as 72 cents earlier this month. It's close to a 60% drop.
So all of these moves represent a massive outflow of capital from the cryptocurrency space. This is what must be behind a halving in the value of most cryptocurrencies in a few weeks.
Bitcoin and Elon Musk: a complicated relationship
But the origins of the "cryptographic crash" seem to stem from only one man. That man would be Elon Musk, the CEO of electric vehicle and battery maker Tesla Inc.
Musk has actually been one of the biggest cryptocurrency cheerleaders in recent months. His tweets about Bitcoin and Dogecoin in particular have sparked huge waves of interest in the cryptocurrency space. And it's widely acknowledged that Tesla's announcement that it would accept Bitcoin as a payment method for its products in March really lit the fuse for the 2021 cryptocurrency rally.
But the man who started the fire also helped put it out. On May 13, Musk announced that Tesla would cancel its previous announcement and would no longer accept Bitcoin as a payment method.
As it was around that date that most of the aforementioned cryptocurrencies peaked, we can confidently say that this is what triggered the sell-off.
So what is the future of Bitcoin and other cryptocurrencies? Well, who knows. Some, including ARK Invest's Cathie Wood, continue to support bullish cases of owning Bitcoin and other cryptocurrencies. But with such a volatile asset class, forecasting is a dangerous game.
If all of the above proves true, then we should wait for another move by Musk to resume a bullish rally. But is it possible that cryptocurrencies have to live on the moods of only one person? So what are all the projects built on them for?
Comment below and let us know what you think. Are you ready to invest in such a volatile and risky market?