Cryptocurrency

The recent Bitcoin crash

By: Dale Arasa - @inquirerdotnet

Inquirer Los Angeles / 06:49 AM May 21, 2021

The internet’s been buzzing for weeks regarding this year’s bitcoin crash. Crypto’s numero uno pulled almost the entire crypto market along with it. Yet, numerous investors took this as an opportunity to buy even more cryptocurrencies.

We’ll start with the reasons why bitcoin’s price took a nosedive. At the time of writing, digital coins have been showing signs of recovery. More importantly, we’ll explore how investors reacted and what first-timers can learn from it.

The economy, the stock market, and the crypto market all run in cycles. The all-time highs can’t go on forever, so asset prices sometimes dip. If you’re planning to invest in anything, the recent bitcoin crash teaches how to find opportunities anytime.

The cryptocurrency market crashed earlier this month

In mid-April, everything was going great for Bitcoin investors. The crypto king hit a record high, soaring past $64,000. Aside from bitcoin, Dogecoin and other altcoins were all green.

Then, two events put a stop to this bull run. First, China warned that it would block crypto exchanges. Last week, Elon Musk, a.k.a. “The Dogefather,” said Tesla won’t accept bitcoin.

On the other hand, Binance saw it as a market correction. Too many people bought Bitcoin due to the all-time high. This eventually reduced demand and price.

As a result, Bitcoin suffered a severe crash. It shaved $6.1 billion of its value. On May 20, the price of bitcoin dropped to $37,152,92. Worse, it sent nearly all the altcoins falling.

Even Elon Musk’s fave digital currency dropped from $0.72 to $0.32. The #2 crypto Ethereum shot up to $4,354.88 then crashed down to $2,376.80.

At the time of writing, the market seems to be recovering from the bitcoin crash. The #1 crypto’s up by roughly $42,000. It’s a shadow of its $64,000 peak, but it’s a start.

Dogecoin is getting back on its paws as the price goes to $0.4087. Ethers are rising to $2906.95. The crypto market moves wildly, so there’s no telling how these prices will go.

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How did investors respond?

Many people feared this would turn out like the Crypto Winter of 2018. Dallas Mavericks owner Mark Cuban says it’s unlikely. This bitcoin crash is nothing compared to the past corrections!

The recent crash caused a 51.1% drop. On April 10-12 of 2013, the bitcoin price dropped by 82.6%. The deepest one was in November 2013 – January 2016. It nosedived by 86.9%!

Unfortunately, many investors didn’t know this. Worse, the mainstream media kept reporting doom for the crypto market. As a result, there was widespread FUD (Fear, Uncertainty, Doubt).

Lots of newbies and first-timers started selling. This could be one of the reasons for the bitcoin crash. They’re known as having “paper hands’ in the crypto world.

They quickly follow the hype, then immediately drop their coins at the slightest hint of risk. On the other hand, experienced investors simply HODLed (hold on for dear life) their coins.

They often rallied people in forums to keep their “diamond hands.” In other words, they told the community to stay calm. This is a regular part of crypto investing.

Surprisingly, some of them saw it as a great opportunity. They swept up more digital assets while the prices were still low. Once the market recovers, they could earn much more!

Lessons learned from the bitcoin crash.

After seeing this disaster, you could learn valuable lessons. It shows the importance of proper planning and research before investing. Here are some of the other takeaways:

Have an investment plan – Know what you want from investing in crypto. Do you want to earn quickly? Perhaps you want to just to leave the coins for a few years?
Study your investments – Never invest in something you don’t understand. Diamond hands took time to learn about their digital coins. They studied how the market works and how it did in the past. That’s why they HODLed despite the bitcoin crash.
Go beyond the hype – If you listened to mainstream media, you probably thought the crypto market is a goner. Other investors believed it, so they sold their coins. If the market returns to normal, they won’t be getting their assets back.
Remember that crypto is volatile – Cryptocurrency prices move wildly, so first-time investors should expect it. You won’t last if you shed your portfolio every time the market goes down!
Crypto has a bright future – People didn’t know just HODL for the money. Some are true believers of crypto, so they held on despite the bitcoin crash. They know that cryptocurrency will change the world in one way or another. Many countries and companies are even accepting bitcoin nowadays!

Final thoughts

There’s another lesson you should keep in mind before investing. Never invest money you’re not willing to lose. Every investment option has risks, even the old ones like stocks and bonds.

You can never remove risk in any investment. Although you could reduce it, diversify your investments by purchasing other asset classes besides bitcoin.

Many people held on despite the past bitcoin crashes. Now, their coins are worth much more than ever. Learn all you can before investing. Make sure to start as soon as you can!

Learn more about the recent Bitcoin crash

What caused the BTC crash?

Many factors could have brought the bitcoin crash. News from China and Elon Musk is considered one of the significant reasons. Binance says it could be a crypto market correction.