In the aftermath of the 2008 financial crisis, the world was introduced to Bitcoin, an exciting new way to store and send value between two parties without any middlemen. Now, with the recent stock market crash in the US and a 60% decline in Bitcoin’s value, many people are losing faith in Bitcoin. But investors needn’t worry, the cryptocurrency isn’t in any danger of going bust. Why? As the old saying goes: “when the tide goes out, it leaves ripples.” That’s what will happen next, as the stock market crash will ripple through the whole economy, which will then ripple through Bitcoin.
Bitcoin is a virtual currency that was created in 2009 by an unknown person using the alias Satoshi Nakamoto. Ever since the cryptocurrency was released, it has been at a constant state of growth, gaining a lot of popularity around the world. But, unlike other forms of digital money, Bitcoin is not controlled by a central authority. Instead, it is maintained by a network of computers called miners, who perform a complex task of ensuring that every Bitcoin transaction is recorded and secured. This process is known as ‘mining’ and miners are rewarded for their work with new Bitcoins. Unfortunately, the cost of mining Bitcoins has been on the rise over the past few years.
The cryptocurrency market is a volatile one and is always changing, with new highs and lows constantly being traded. Bitcoin, the most popular cryptocurrency, has had a roller coaster ride lately, hitting an all time high of $19,000 late last year and a recent low of $6000, and it’s still hovering between the two. Meanwhile, other cryptocurrencies have been making even more recent highs, with Ethereum’s value hitting a recent high of $1,000, and Ripple averaging over $1,300 in daily trading volume.. Read more about will bitcoin crash again 2021 and let us know what you think.Summary of the situation
- The stock market and the cryptocurrency market are connected, even though they are far apart.
- In March 2020, the cryptocurrency market and the stock market collapsed.
- In addition, the DXY index rose 8% and now stands at 102,992.
The crypto-currency market is going through a rough patch. Investors have been repeatedly surprised as the downward trend shows no signs of stopping. It all started in May when the cryptocurrency market began to decline amid Elon Musk’s tweets and rumors of a Chinese ban. In March 2020, as Covid-19 spread like wildfire, the crypto and equity markets crashed and plunged into darkness.
Several organizations have been forced to close their stores or cease operations. This led to the demise of the stock market and thus the decline in the value of bitcoin. The value of bitcoin has halved. We see a similar situation now that bitcoin has reached half of its historic high. If the stock market crashes, it also means that bitcoin will fall, turning traders into holders.
Bitcoin is influenced by the stock market
A year earlier, in March, we saw a similar situation. At that point, the entire market went into a bearish slumber. For now, the U.S. Dollar Index is a preliminary indicator of the dollar’s strength against other currencies, with the index at 102.992. We have seen an increase of 8%. Today, the US Federal Reserve also announced that it will raise interest rates by 2023, pushing back the previously mentioned date.
This has led to an increase in demand for fiat money, which most people are happy with. The direct implication is that people sell their bitcoins and stocks to get fiat. Still, we can say that bitcoin is still rising, not much, but not falling either. This is a sign that was missing from the March 2020 crash.
Therefore, we can conclude that a decline in the stock market does not necessarily lead to a decline in the cryptocurrency market. There is still a chance that the cryptocurrency industry will continue to flourish gradually. However, if the cryptocurrency market falls along with stocks, bitcoin could fall below $30,000. Prominent investors, such as Willie Wu, have stated that the decline in the stock market and the rise in the U.S. dollar will strengthen and extend the downward trend.This week the risk of a stock market meltdown has been increasing, the market has seen a series of sell offs, and the last few days have seen an unprecedented level of panic selling. The fear is that this could trigger a “correction” which will cause a serious downturn in cryptocurrencies.. Read more about bitcoin crash 2021 and let us know what you think.
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