3 Reasons Bitcoin Is Crashing Right Now
If you’re into Bitcoin and scared of heights, don’t look down. At the time of this writing, the price is near $10,400 USD or $13,600 Canadian. It’s only within the last three days that the price was hovering around $12,000 USD or $16,000 Canadian. Why is this all happening so fast? Turns out, it’s not just one factor. There are actually three key drivers behind Bitcoin’s latest nosedive. Let’s explore them.
The Stock Market Is Plummeting
The S&P 500 is a stock market index funds that tracks the average share prices of the top 500 companies in America. That index dropped a staggering 216 points or 6% in just the past 24 hours. The total market capitalization of all the companies listed on the S&P 500 is currently around $27 trillion, so a 6% drop in one day is a big deal.
While many theories surrounding Bitcoin’s correlation with the stock market propose that the two don’t actually work hand-in-hand, the coronavirus pandemic and the performance of FAANG technology stocks (Facebook, Amazon Apple, Netflix and Google) seem to cause both stock market and digital currency investors to panic and sell off their positions. The fact that jobless claims across the United States are higher than the last recession in 2009 isn’t good either.
DeFi is Unraveling
Decentralized finance projects like Compound, SushiSwap and Yearn.Finance are helping some crypto traders get-rich-quick. However, decentralized exchanges like UniSwap and MooniSwap, which play a large role in helping traders enter and exit positions in these tokens under the radar (since all of those projects are built on the Ethereum blockchain and don’t require client verification), also charge an exorbitant amount of gas fees for participation. This means traders are liquidating their positions and hesitant to pay those fees again to get back in the game, causing DeFi prices to plunge and Ethereum to suffer and all other altcoins as a consequence.
Profitable Miners Are Selling Bitcoin
The recent price run-up in Bitcoin that’s been happening for the past month or so means miners want to cash in. Earning a profit is the obvious reason, but being able to influence the market and cause a steep downturn in the price also deters new miners from entering the game and thus allows existing miners to maintain their influence going forward.
The reasons above (among others) explain the why behind Bitcoin’s latest plunge. If you’re ready to make the most of Bitcoin’s cheaper price, and are ready to buy the dip, look no further than right here at Netcoins.ca.
Written by: Jack Choros
Writer, content marketing at Netcoins.