BTC Back Above $40K After Biggest Crash in More Than a Year

On Wednesday, the price of BTC plummeted as low as $30,415, according to data from CoinGecko. The vast majority of altcoins followed the trend as well, with as much as $500 billion wiped off the entire market in less than a day. 

Many people blamed the sell-off on news of “yet another ban on BTC in China,” though that isn’t quite what happened (and many mainstream media outlets misreported that news). On Tuesday, a group of Chinese banking and payments associations merely reiterated the same rules (and warnings) that have been in place since 2017, and China’s central bank re-shared their warning on social media.

Tesla and SpaceX CEO Elon Musk arguably kicked off the bearish streak for BTC last week when he suddenly rescinded Tesla’s acceptance of BTC as payment, citing environmental concerns. Musk continued to tweet criticisms of BTC over the next few days, while touting Dogecoin as a potentially more sustainable alternative.

This massive sell-off inevitably drew fresh waves of crypto criticism from legacy media and financial institutions, allowing BTC skeptics to take a victory lap.

Luis de Guindos, vice president of the European Central Bank, said that cryptocurrencies are not “a real investment.” In an interview with Bloomberg, de Guindos argued, “This is an asset with very weak fundamentals and that is going to be subject to a lot of volatility.”

But amidst the chaos, members of the crypto community remained mostly unfazed. 

Nic Carter, founding partner at Castle Island Ventures and co-founder at Coin Metrics, framed BTC’s volatility as an “endemic feature of the asset class,” reflecting its future adoption trends. He also believes that while Musk’s recent comments on BTC played a role in the latest crash, “this is certainly not the sole reason.”

"Volatility is an endemic feature" of BTC, says Coin Metrics co-founder Nic Carter.

So what's driving all of this crypto volatility? Carter speaks with @emilychangtv and @TheStalwart https://t.co/g4sOAJB3gi pic.twitter.com/IQF3nzbV2R

— Bloomberg TV (@BloombergTV) May 19, 2021

Danny Scott, CEO of UK-based cryptocurrency exchange CoinCorner, agreed that newcomers could be scared off by witnessing their first dramatic dip in BTC’s price. However, “this is normal for a bull run,” he tweeted. “Fundamentals have not changed. Infrastructure building has not changed. BTC becomes stronger from these events. Focus on the long term, not the short.”

Meltem Demirors, chief strategy officer at CoinShares, spins the recent crash as a positive long-term development. “It’s been really frothy,” Demirors told CNBC. “There was a lot of leverage in the markets.” She’s confident that the correction is “healthy” and that “a pullback is normal in crypto.” 

ARK buying more $TSLA and $COIN https://t.co/LzP6EQalbf

— Eric Balchunas (@EricBalchunas) May 20, 2021

Cathie Wood of ARK Investments, a prominent BTC believer (whose firm has also defended BTC’s energy use) took the opportunity to buy more shares of two of the biggest BTC-associated stocks: Coinbase (COIN) and Tesla (TSLA).

By Thursday, BTC had begun to recover from yesterday’s crash, changing hands around $40,000 at press time.

Source