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Bitcoin Price Plunge: Is The Crypto Bubble About To Burst?

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Bitcoin price plunge

Bitcoin Price Plunge: Is The Crypto Bubble About To Burst?

The recent bitcoin price plunge was the most significant dip since March last year. The question in the mind of most traders is if the crypto bubble is about to burst. According to Bloomberg, a steep selloff in Bitcoin raises concerns that the crypto bubble may be about to burst. This is one thing bitcoin holders and crypto traders dread to see. In the past 48 hours, bitcoin slid as much as 26% in the biggest 2-day dip since March 2020.

Bitcoin price plunge

Since Friday (January 8, 2021), bitcoin has wiped out almost $185 billion in value. This is more than the market capitalization of 90% of individual companies in the S & P 500. You can get the picture now. Crypto analysts are yet to determine whether this is the beginning of a larger correction. Meanwhile, we have seen this parabola break, so it might just be the start of a larger correction.

Also Related: How crypto AML Software will improve compliance in banks

During the past year, especially in December, the bitcoin experienced an unprecedented bullish run. The movement evoked memories of the 2017 mania that first made digital currency a household name. Also, the price crashed just as quickly as it skyrocketed. On January 8, the price of bitcoin almost reached $42 000. In that bullish run, retail traders and Wallstreet investors were clamoring for a piece of the action.

Matt Maley, the chief market strategist at Miller Tabak + Co, highlighted that the bitcoin’s bullish run was a parabolic move. The question we all need to answer is this, “what happens with all parabolic moves?” You will experience severe corrections. Although bitcoin price plunge is currently “shaking” the market, it will still rise higher in the long-term. But it will still experience more corrections along the way.

Is It Time To Take Some Money Of The Table?

As retail traders and crypto investors bemoan the recent bitcoin price plunge, Scot Minerd said, “Time to make some money off the table.” Minerd is the Chief Investment Officer with Guggenheim Investment. Meanwhile, in late December 2020, Minerd predicted that bitcoin’s price eventually reaches %400 000.

Bitcoin’s true believers and cryptocurrency enthusiasts argue that the current bitcoin price crash is different boom-bust cycles.

Their reason is that the asset has matured as a result of the entry of institutional investors. Therefore, they believe the asset is increasingly seen as a legitimate hedge against dollar weakness and inflation risk. Meanwhile, others worry that the bitcoin rally is untethered from reason and driven by vast swathes of fiscal and monetary stimulus. This last group of people argues that bitcoin is unlikely to serve as a viable currency alternative.

As many investors move to enrich themselves on Bitcoin, the asset has begun to draw regulators’ attention. UK’s Financial Conduct Authority (FCA) has warned that investing in crypto assets or investments linked to them are high risk. The FCA’s concerns include price volatility, the complexity of the product offered, and the lack of consumer protection regulation.

Why Do We Get Extreme Bitcoin Price Plunge?

Many factors influence the extreme bitcoin price crash. Although there is no clear industry consensus on the reasons, there are plenty of suspects to look into. Here are some of the worthy mentions to consider as bitcoin price fall from grace:

  • Crypto (Bitcoin) whales

According to Bloomberg, about 2% of the total bitcoin holders own at least 90% of the total coin available. These big bitcoin holders are known as “whales” in the crypto space. CryptoQuant CEO Ki-Young Ju said the reason for the bitcoin price plunge is partly because crypto whales started making large deposits of their bitcoin holdings to exchanges to cash in on bitcoin record highs. This is exactly the same scenario that played out in the 2017 bull run. Whales contributed to a significant shift in crypto’s value just by moving their assets to other platforms. According to the blockchain analytics firm, IntoTheBlock, whales uploaded 93,630 BTC in different exchanges. The amount totaled more than $1.6 billion.

  • Just a healthy pullback

Many people, especially bitcoin lovers, believe that the current bitcoin price plunge was to be expected. They see it as a good thing to allow bitcoin to let out a bit of steam before skyrocketing to dramatic new heights. The argument is logical but vague since there is little data to support such a claim.

  • Regulatory uncertainty 

The United States regulators have always had a dysfunctional love-hate relationship with crypto assets. SEC’s recent court case with Ripple should ring a bell and serve as a souvenir to those in doubt. The recent news shows that the U. S. Treasury Department wants to implement a mechanism that empowers them crypto wallets of users. Such new will undoubtedly trigger some sell-offs.

  • Fear on the part of traders and investors 

You shouldn’t underestimate the impact of the average trader. There is certainly a large group of battle-hardened bitcoin investors and holders who still carry the 2018 crypto winter scars. They have been waiting patiently to recoup their losses or at least have a second chance at redemption. Such people were only waiting to sell their BTC at record high prices.

Also read: Top Bitcoin hardware wallets: a comprehensive list

Today, bitcoin is anybody’s game, and savvy investors are aware of this. Therefore, when the price dips suddenly, nerves get frayed, and sell buttons are clicked. Many bitcoin holders may propagate the crypto’s unstoppable rise; they may not be so optimistic in private. All remember the saying, “buy the rumor, and sell the news.”

  • Derivatives trading 

The recent drop in bitcoin price has been accompanied by a large liquidation of multiple derivative positions. The amount almost hit $2 billion, and this led to “market overheating.” It means that the value of perpetual contracts has become greater than the value of bitcoin.

We have sophisticated trading and institutional products like Futures, leveraged margin trades, and decentralized finance protocol. The implication is that a little slide in bitcoin’s price can initiate a chain reaction by trading bits. This can lead to an abrupt oversupply of BTC and a further crash in price.

Conclusion 

The recent bitcoin price plunge proves the high volatility of the crypto market. Therefore, before you decide to hold new positions or exit existing ones, take your time to study the market. You need to understand that there are many stakeholders, and each plays a significant role in bitcoin’s price movement.

 

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What is Cryptocurrency And How Does It Work? 

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Obiex finance website

Cryptocurrencies are decentralized digital assets that operate on blockchain technology that in turn operates by storing a ledger of every transaction on all nodes powering the blockchain. 

In layman’s terms, blockchain technology is like a record keeper, it collects data (in blocks) and links one block of data to another, forming a chain. The data on the blockchain is open for all to see and cannot be easily altered. Blockchain technology can be used for a variety of use cases besides cryptocurrency, ranging from voting to crowdfunding, keeping health records, etc.

Using Bitcoin as an example, nodes are computers connected to the network to mine Bitcoin,  – this collection of independent nodes working together is what makes the network decentralized.

The decentralized nature of cryptocurrency is down to the creators recognizing flaws in traditional banking & financial systems like governments and financial institutions acting only in their best interests and not in the best interest of the common man, leading Satoshi Nakamoto (the creator of bitcoin and blockchain technology) to take steps to rectify that.

Related: What are NFTs?

To make cryptocurrency transactions, you will need to have a set of both public and private keys that will act as passwords protecting your crypto wallet. 

The Public key is connected to your wallet address, allowing you to share the address with others to receive cryptocurrency, while the private key is known to only you and is what you will use to approve outgoing crypto transactions from your wallet. 

Trading Cryptocurrency on Obiex

Obiex finance website

With the popularity of cryptocurrency trading currently at an all-time high, the biggest challenge for many rookie traders is selecting which cryptocurrency exchange to trade on.

If you fall in this category, the immediate priority should be finding an exchange that allows rookie traders to make trades easily, doesn’t charge extra fees and is completely secure. That exchange is Obiex Finance.

In this guide, you will be shown how to navigate the Obiex mobile app & website easily and what to do to get started with making cryptocurrency trades. 

Getting started with Obiex Finance 

Obiex Finance is a digital asset exchange and financial technology (Fintech) platform that gives its users the ability to easily execute cryptocurrency trades from anywhere regardless of their skill level.

Their commitment to ensuring that users get the best experience is shown in how they allow instant swaps from volatile coins like Bitcoin to stable coins like USDT, and vice versa, without confirmations. In a market where the value of crypto can fluctuate wildly, this feature is especially valuable as it allows users to seamlessly switch between making profits to saving those profits in a more stable currency before the value drops.  

To create an Obiex Finance account, simply head over to their homepage, click on “sign up”, fill in the required fields and verify your email address. After that, create wallet addresses for your crypto assets and you’re ready to start trading!

The cryptocurrency available for trading on the Obiex Finance platform are: Bitcoin (BTC), Ethereum (ETH), Binance Coin (BNB), Polygon (MATIC), Dogecoin (DOGE), Tether (USDT), Binance USD (BUSD), and USD Coin (USDC).

Getting Started with Cryptocurrency trading

After creating your Obiex account, you need to follow these simple steps:

  1.     Have a Trading Strategy: Trading cryptocurrency without having a strategy in place is the easiest way to lose your money. You will need to research the various crypto trading strategies thoroughly and choose the one that best suits your needs and temperament. For example, if you’re a patient person who is content to make smaller, safer trades over a long period of time instead of making riskier trades, then scalp trading is the best trading strategy for you. There are also other crypto trading strategies such as Swing trading, position trading, Arbitrage, dollar cost averaging etc.
  2.     Pick the cryptocurrency you’d like to trade: There are several cryptocurrencies available on Obiex Finance such as Bitcoin, Ethereum, Binance Coin, Tether etc. Selecting which cryptocurrency to trade is usually down to making a choice; whether to stick with the safer, more established cryptocurrencies like Bitcoin or to go with the more volatile coins that have a high upside and an equally high-risk factor like the Dogecoin which can move in either direction based on what Elon Musk tweets.

It is also important to note that when you pick a cryptocurrency to trade, it would be wise to ensure that the cryptocurrency matches the strategy you pick. For example, if your preferred strategy is patient scalp trading, then investing in volatile coins that have a high upside but carry a lot of risk is not the wisest move. 

To swap crypto on Obiex Finance, add the wallet of crypto assets you’d like to swap, send the crypto to the wallet you just created, navigate to the ‘swap’ option on your dashboard, and select the coins you’d like to swap. You will receive the swapped coin in your wallet balance immediately without waiting for network confirmations.

  1.     Securely store your cryptocurrency: The same way you’d protect your goods and profits if you had a physical store is the same way you need to protect your cryptocurrency so it doesn’t fall into the wrong hands.

You can store your crypto securely on your Obiex wallet but if you want an alternative, physical wallets are also an option. Physical wallets allow you to store your crypto in secure hardware, offline storage device reducing the likelihood of online hackers stealing your hard-earned crypto. This is a list of reliable physical wallets you can use.

Conclusion

If you’re a newbie to crypto trading, the keyword is patience. Taking the time to properly understand the market before making trades will stand you in good stead. While risks occasionally pay off, a patient, long-term strategy is required to make consistent profits. For more information about trading as a newbie, you can check this out to understand unfamiliar crypto terms and to learn more about spot trading and futures.

Obiex Frequently Asked Questions | Obiex FAQs

  • Will I be charged a fee when I swap coins on Obiex? 

No you won’t. While other crypto exchanges charge for trades and require confirmations to execute swaps, Obiex allows you to make free, instantaneous swaps without the delay that comes with waiting for confirmation. This also helps you avoid unnecessary losses.

  • Can I trade crypto on Obiex if I don’t know much about crypto? 

Yes, you can! The Obiex Finance platform allows both rookie and experienced traders to make easy, safe trades regardless of trading experience.

  • Can I send and receive crypto easily?  

Yes, you can. To send crypto, you will use your private key to execute outgoing trades and your public key/your wallet address to receive incoming trades. You can also send and receive crypto using just Obiex usernames.

  • Why do I need to swap coins? 

Swapping coins allows you to either acquire a coin you think is (currently) more valuable than a coin you have a lot of. You can also use swaps to ensure that your funds are invested in a more secure coin like USDT if you feel the volatile coin you’re holding is about to go on a bear run and lose value.

  • Do I get a referral bonus when I invite friends to use Obiex? 

Yes, Obiex has a referral campaign that rewards users that invite their friends and family to trade the minimum of $10 on Obiex.

 

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