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The cryptocurrency market has been volatile in the past few months, fueled by both institutional adoption and retail speculation.
The crypto space woke to a bear market, whereby Bitcoin (BTC) price fell as much as $38,717.16 according to Binance-backed Coinmarketcap. Consequently, the total crypto market capitalization fell below $2 trillion to approximately $1.87 trillion at the time of reporting according to CoinGecko.
The nosedive nearly affected the entire altcoin market, which has significantly contributed to the rise in fear in the crypto space. Essentially, market analysts had anticipated a long breakout, particularly on Bitcoin after consolidating in the past few months. Furthermore, Bitcoin’s market price had retested the daily 200 MA (moving average). The daily 200 MA acted as a support in several corrections during the 2017/2018 bull market.
However, the current bull market has different fundamental aspects than 2017/2018. The recent bull market was fueled by institutional adoption, especially in the Defi ecosystem.
According to market analytics provided by MarketWatch, Bitcoin is down approximately 22.73%, 26.51%, and 25.85% in the past three months, one month, and five days respectively through Thursday. However, worth noting is that Bitcoin’s value has added approximately 321% and 39.61% in the past 12 months and five months respectively.
The asset was trading around $40,193.98 at the time of reporting according to CoinGecko. Its market capitalization was around $760,225,118,554, with over $300 billion being liquidated during the flash crash.
What Happened in the Crypto Market before Bitcoin Price Flash Crash
The cryptocurrency market has been volatile in the past few months, fueled by both institutional adoption and retail speculation. During the first quarter, Tesla Inc (NASDAQ: TSLA) announced the purchase of $1.5 billion worth of Bitcoin units, and would henceforth allow its customers to make Tesla-purchase payments using Bitcoin.
Consequently, Bitcoin price rallied from around $40K to an all-time high of slightly above $64,800 according to CoinGecko.
However, the new all-time high has turned out to be strong resistance. The primary doom for the recent dip has been attributed to Tesla’s decision to stop receiving Bitcoin as a form of payment.
According to the electric vehicle company, Bitcoin’s proof-of-work concept consumes a lot of electricity, particularly non-renewable, thus a huge cost to the environment.
The cryptocurrency market received another blow after it was reported that China has issued its financial institutions warning on the crypto market. “Late yesterday in Asia, the PBOC issued a warning about a rebound in speculation in virtual currencies. China announced that financial and payment institutions are banned from pricing or conducting business in virtual currencies. The story did not get much traction overnight but seems to be picking up steam this morning,” said Jeffrey Halley, senior market analyst at OANDA, in a note to clients.