...if you hold cryptos and/or jumped onto the crypto bandwagon as does a number of mainstream participants, you would be stumped explaining its recent demise but continue to be unwavered in the future and relevance of the crypto ecosystem..
...if you do not hold cryptos and never saw a need to buy them despite the FOMO , you would be saying it is just a Ponzi scheme that goes through its periodic speculative boom /bust and that buy the dip is never a consideration because it could be worthless (as Naseem Taleb said).
...all I can say is that without both the US and China backing it, and we know why (they do not want competition to their own digital currency) , it can't be allowed to be worth enough to stress over it.
...and given its volatility, no average individual would be stacking their entire worth on cryptos to make a difference. And it is more likely that one loses his/her crypto assets to hackers before he/she can ever use those cryptos to transact in the real world.
Bitcoin crumbles as states intensify assault William McInnesReporter
Updated Jun 23, 2021 – 6.05pm,first published at 5.17pm
A renewed crackdown on cryptocurrency mining in China and Iran has rattled the price of bitcoin, pushing it to its lowest level this year, and shrinking its premium over other popular coins.
The cryptocurrency leader fell below $US30,000 ($39,770) for the first time since January late on Tuesday (AEST) and wiped out its year-to-date gains after both states intensified their crackdown on energy-intensive mining of digital assets.
An estimated 65 per cent of the global bitcoin market is mined in China and 90 per cent of the country’s mining capacity has been shut down by the state, according to China’s The Global Times.
Crypto exchanges and initial coin offerings are banned in China, but miners have largely evaded prohibition, although some provinces such as Inner Mongolia are trying to weed out the practice.
“When you get the second-largest sovereign in the world taking action, it does lead to a bit of concern,” said Heath Behncke, managing director of Holon Global Investments.
“The concentration of mining in China has been huge, but now a lot of miners are moving equipment out of China.”
On Tuesday, Iranian police seized 7000 computer miners at an illegal cryptocurrency farm. The state had banned mining of cryptocurrencies last month as part of efforts to reduce the incidence of power blackouts, which officials blame on surging electricity demand during the hot and dry summer.
The fall below $US30,000 meant bitcoin had broken through an important support level, experts speculated, even if the near-term path is unclear.
Vimal Gor: “There’s numerous reasons why prices have fallen.” Louie Douvis
“We’ve had massive amounts of volatility and prices are down, but that’s to be expected as we are dealing with a nascent asset class,” said Vimal Gor, head of bond, income and defensive strategies at Pendal Group.
“The way these things work is the price moves then we try to find a narrative to justify the price movement. There’s numerous reasons why prices have fallen, but there’s also strong reasons to believe this is just a drawdown within a long-term bull trend.”
But the fall could also prove to be a buying opportunity for many investors, given the discount bitcoin is trading at compared with historical levels.
“Bitcoin’s price history and volatility is evident, and that will continue,” said Mr Behncke. “But the way I view it is, if people thought bitcoin could go to zero before, the moves by banking regulators has taken out that zero case.
“There’s going to be vastly more broad-based access and adoption coming as a result of larger companies coming on board.”
“The recent drawdown is also due to the macro picture, as the Fed turned a little bit more hawkish, so that has pulled back a bit of the free money narrative that’s been in the market since COVID,” said Mr Gor.
Despite the weakness in the last few weeks, most cryptocurrencies remain well above where they were a year ago.
“The market looks to be overreacting to what is essentially old news,” said Independent Reserve chief executive Adrian Przelozny.
“Everyone knows what China’s policy towards digital assets is, and them following through with the enforcement of those policies shouldn’t come as a surprise.
“Long term, the future of the cryptocurrency market still looks bright. Every time there’s a dip in the market we see a large increase in trading volume as investors rush in to buy the dip.”
However, the erasure of bitcoin’s year-to-date gains hasn’t been mirrored in a number of other cryptocurrencies.
While bitcoin has fallen close to 40 per cent in the last three months, ethereum has risen close to 20 per cent and last traded at $US1999.97. XRP has risen 13 per cent over the same period.
“Bitcoin is obviously the poster child, the coin with the longest history and the most used coin. This is crucial when we are talking about an asset class where the network effect is dominant,” said Mr Gor.
“Ethereum has also suffered over the short term, but over the medium term is performing very strongly as its adoption grows.”
Investors still believe the long-term future for cryptocurrencies remains intact.
“With ethereum, there’s a lot of excitement and NFTs (non-fungible tokens) have taken the world by storm,” said Mr Behncke. “There’s a lot of excitement there.
