- The recent downturn sees Bitcoin heading for its worst quarter since 2018.
- Bitcoin is down 46% this quarter from its amazing run in the first quarter.
- China’s crypto crackdown over mining environmental damage is a root cause of the bearish trend in the market.
- Big guns sell-off to cut their losses, but whales are still whales, and continue to go big on Bitcoin.
The volatility of cryptocurrencies sends the price cycling up and down at alarming speeds. Cryptocurrencies, which boasted of market capitalization hitting $2.5 trillion at the height of their gains this year, are experiencing a very rough period, with over $900 billion being wiped off their market capitalization.
The no. 1 cryptocurrency, Bitcoin, has taken most of the heat, losing over 50% of its value from an all-time high of over $64,000 to below $30,000 on Monday 21st. Ethereum has also been on a decline from its high of over $4,000, trading, at the time of writing, at $1,951.
Is the Worst Yet to Come for Bitcoin?
Bitcoin is heading for its worst quarter since the bearish market in 2018, and the second-worst quarter since the downturn of 2014. Bitcoin is already down by 46% this quarter after the stellar run it experienced in the first quarter, which saw its market capitalization grow to over $1 trillion.
If this downward trend continues, this could be a comparable or worse period to the first quarter of 2018, when Bitcoin lost almost 50% of its gains in 2017.
Despite the downtrend, Bitcoin is still up 10% this year, but could be in trouble should the trend continue. With good news about the adoption of Bitcoin coming out around the world, the crackdown in China could cut deeply to deliver Bitcoin its worst run since 2014.
Big Guns Are Getting Out of Bitcoin
Institutional involvement in Bitcoin has peaked in 2021, with predictions that it would grow even further until the dip kicked in. It is no surprise to see massive sell-offs as the prices of cryptocurrencies fall. People get into cryptos to make a profit and are loath to be on the losing end.
For the sixth consecutive week, some institutional investors have been offloading their Bitcoin holdings. In just over seven days, more than $89 million of outflows were seen in BTC tracking investment products.
The institutional offload of Bitcoin has extended to other assets as the general downtrend continues. China’s decision to clamp down on mining, as most of their cities miss their climate targets, is the leading factor behind the crash in prices.
The hash rate of Bitcoin has hit an eight-month low, leading to a loss of confidence in the crypto giant. While some institutional investors are departing the scene, some, like MicroStrategy, have seized the opportunity to increase their holding.
On the Flipside
- Bitcoin may rise again to make another of the stellar runs of days past.
- The construction of solar-powered mines will lead to increased mining power with clean energy.
- The shift started after Elon Musk cited Bitcoin’s power consumption and contribution to environmental concerns as some of the reasons for Tesla’s decision not to accept Bitcoin.
Whales Are Still Whales
No matter the market situation, some investors continue to stand by Bitcoin and are still going all-in on the crypto giant. Michael Saylor’s MicroStrategy has invested another $489 million to purchase 13,005 bitcoins, bringing the total number of bitcoins held by the company to 105,085.
Cathy Wood’s Ark Investment Management has also bought through the bitcoin dip, purchasing 1,046,002 shares of Grayscale’s Bitcoin trust. Bitcoin whales have pressed on in buying large amounts of bitcoin and they are not slowing down.