6 min read
Opinions expressed by Entrepreneur contributors are their own.
After recovering a bit from the tragic fall of May 19 , on Sunday Bitcoin fell again to $ 31,227 . This represents a loss of more than half of its value in just a month and a half, since only on April 14 it reached its all-time high of $ 64,863 . Faced with this scenario, many wonder if it is time to sell or buy the most popular cryptocurrency, what is better at this time?
Just one day earlier, on Saturday, May 22, Bitcoin registered a price of $ 38,588 . On Sunday morning, in a massive sell-off, its value fell 19% to $ 31,227 , according to data from CoinMarketCap .
This Monday, the Bitcoin registered a recovery of 23%, reaching 38,612 dollars , but the variations continue.
This new crisis occurs just days after the great crash of May 19 , when Bitcoin lost 30% of its value in a single day, going from $ 45,500 to $ 31,663.
“Many are pointing out that Bitcoin’s volatility is unsustainable,” wrote Amy Wu Silverman of RBC Capital Markets, as quoted by Reuters . “In fact, Bitcoin oscillates severely and dizzily .”
The collapse of other cryptocurrencies
Bitcoin is not the only digital currency affected by the debacle. In fact, the total capitalization of cryptocurrencies fell more than 20% , going from more than 1.6 trillion dollars to 1.2 trillion dollars.
Source: CoinMarketCap .
Ethereum , the second largest cryptocurrency behind Bitcoin , went from $ 2,475 to $ 1,785 this Sunday, a loss of nearly 28% in one day . Although for this Monday it recovered to $ 2,455, it is still very far from its historical maximum of $ 4,337, a price that it registered on May 12.
Source: CoinMarketCap .
As for Elon Musk’s favorite cryptocurrency, Dogecoin , that same day it hit the low of $ 0.2494 . The previous day it was trading at 0.3533 , that is, it lost just over 29% of its value during the day. This collapse was not as dramatic as that of May 19, when it went from 0.5035 to 0.2360 dollars, a fall of 53.3% in its value. Although it rallied a bit to $ 0.3408 on Monday morning, it is still far from its peak of 0.7111 on May 8.
Source: CoinMarketCap .
Why are cryptocurrencies falling?
It all started on May 12, when Elon Musk posted on Twitter that Tesla would no longer accept Bitcoin as payment. A few days later came the announcement that the Chinese government would prohibit its financial entities from making transactions with cryptocurrencies .
Some analysts point out that another factor would be the news that the Huobi exchange was reducing its assortment in some countries, due to the new Chinese policy.
“Right after the news, the level of short-term sentiment for bitcoin fell to levels not seen since May 19, which was followed by a drop in price,” explained Nick Mancini , analyst at the analytics platform. Trade the Chain , cited by Coindesk .
There is also the long-awaited regulation from the United States . Last Thursday, the US Department of the Treasury indicated that it is a requirement that transfers of at least $ 10,000 in cryptocurrencies be reported to the Internal Revenue Service .
“As with cash transactions, companies that receive crypto assets with a market value of more than $ 10,000 will also be reported,” the agency said in a report on tax application proposals published on May 20.
Should you keep, sell or buy Bitcoin?
According to the CryptoSlate database, in the last week there has been an increase in searches such as “Should I sell my bitcoins?” in Google.
In the investment world the premise is simple: buy assets at a low price and sell when it rises . So, the answer would be in another question: at what price did you buy your cryptocurrencies?
If you were one of the lucky ones who invested in Bitcoin , Ethereum, Dogecoin or other digital currencies when their price was well below the current one, you are satisfied with the gains and you do not want to risk another fall, maybe you should sell .
On the contrary, if you bought when its price was rising or above the current level, it might be more appropriate to wait for the value to rebound until it reaches or exceeds the price you paid, to minimize losses.
If you have not entered the cryptocurrency fever, you like adrenaline and have a little capital that you can invest without affecting your pocket, you could make a discreet purchase in the hope that it will rise again, which is quite likely.
While Elon Musk noted that Tesla will no longer support Bitcoin to acquire its electric cars, he also made it clear that the company will not sell the ones it already has .
Tesla & Bitcoin pic.twitter.com/YSswJmVZhP
– Elon Musk (@elonmusk) May 12, 2021
Recall that for now Tesla Inc. is the second largest holder of Bitcoin , only after MicroStrategy , a company that offers data software. Now, if the third richest person in the world according to Forbes trusts him, probably also mere mortals should do it.
And you, do you plan to continue betting on Bitcoin and other cryptocurrencies?
Eight Signs That Your Business May No Longer Be Worth Your Time
More Workers Are Thinking Like Entrepreneurs. Why That’s A Problem, And Opportunity, For Employers
Nine Effective Email Marketing Strategies That Aren’t Just About ‘Selling’
Financial Health Tech Startups Put Consumers In The Driver’s Seat
10 Entrepreneurs Share Their Top Writing Tips For Aspiring Thought Leaders
How Making Money Can Be An Articulation Of Your Values