- Billions have been wiped off the market as the prices of cryptocurrencies continue along a rough path.
- Bitcoin price enthusiasts saw a glimpse of hope as the price went above the $35,000 resistance level last week.
- In another development, experts suggest that Bitcoin has been overbought over the years and so this downhill crash was inevitable.
- Others suggest the crypto regulations by the government centred around environmental concerns and this phase will pass.
The volatility of cryptocurrencies has been at the centre of crypto discussions this year with the market even shocking experts. From the record high Bitcoin achieved of over $64,000 to raise the market capitalization to $2 trillion, to the price crashing to below $30,000, the extreme volatility came as a shock to many.
Recently, Bitcoin has been struggling amid the mining regulations in China. A slight price rally saw it get above the $35,000 resistance level but it was short-lived and woes continue. Bitcoin currently trades at $33,361 as bulls try to push it high again.
Has BTC been Over Bought?
The price of Bitcoin, which is currently struggling, has led many to believing that its mass adoption has led to its current predicament.
Bitcoin, launched in 2009, was the first cryptocurrency and has since dominated the market, having over 50% of the market share for a long time. Investors, banks, and other institutions have acquired huge amounts of Bitcoin which has led to a rapid price surge.
The collective effect of this makes new investors scared to purchase more Bitcoin as they feel it’s an asset that has already been over-invested in and instead they may look for altcoins.
If they are wrong, then this is just a phase and Bitcoin will recover like it did in the past. Bitcoin has lost 46% this quarter but this is not new as it lost over 60% in the 2018 crash and over 70% in the infamous crash of 2013.
Altcoin Season is Here
The current struggles of Bitcoin trying to hit and maintain the $35,000 resistance level are due to the rise in altcoins.
Though Bitcoin still rules the market with a current market share of 44.83% and leads in almost every metric, altcoins are closing down on Bitcoin. Bitcoin currently leads the market recovery trend and its price affects the prices of other coins.
The utilities of altcoins have made investors tilt towards them, coupled with the fact that they hold tremendous potential for short-term profits.
In other circles, Ethereum has outclassed Bitcoin this year in growth and it currently trades at $2,078. As altcoins become more popular, investors are leaving Bitcoin for them in search of quick profits or long-term technological advantages.
On the Flipside
- Regardless of the slump, Michael Saylor and other investors are still buying more Bitcoins.
- Bullish investors are still gearing up for a new record-high finish by the end of the year.
The Mining Ban Broke the Camel’s Back
Whether Bitcoin has been overbought in recent years or the growth of altcoins has affected its price, the fact remains that the ban on mining activities across many cities was the straw that broke the camel’s back.
Bitcoin has been over-dependent on China for over a decade with up to 75% of mining activities taking place in China. The clampdown on Bitcoin mining in China was destined to drag prices down.
However, recent development has shown miners have begun to relocate to states like Texas in the US with solar mines springing forth. The market wasn’t ready for strict mining regulations but this will just be a phase that, like others, may just pass.