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Bitcoin crashed after surging over $73k, crypto experts are predicting that this crash was a natural correction due to profit bookings.
The crypto market experienced a significant downturn today, causing investors and market analysts to speculate on the underlying causes of the sudden dip. Bitcoin had experienced a significant surge to reach over $73000 last week and has undergone a considerable decline since then.
What Caused the Crypto Market To Crash?
One possible factor behind this dip is the liquidation issues that have plagued the crypto landscape. The major cryptos Bitcoin, Ethereum, and Solana are particularly affected. Moreover, Coinglass data reveals that Bitcoin liquidations accounted for a total of $246.66 Million, while long-term traders were responsible for more than $666 Million worth of crypto liquidations. Additionally, a significant sell-off of $13.3 Million took place on the OKX-BTC-USDT-SWAP platform.
After two weeks of a crypto market surge with Bitcoin and other altcoins reaching new record highs, the market has undergone a natural correction. Analysts like Captain Faibik predict that this correction is a precursor to Bitcoin’s halving, anticipating a temporary dip before aiming for another all-time high.
The significant surge in the crypto market over the past couple of weeks has triggered panic selling among investors and traders who are aiming to maximize profits from the resurgence. They fear missing out on the profits at the highest and optimal prices.
What is the Future of Bitcoin?
Bitcoin’s creation has a fundamental flaw, according to a popular article by O. Castellano. The supply of Bitcoins is artificially capped at 21 million, a design that lacks economic sense. He noted that an economy requires as much money as transactions and activities that occur within it.
If many people start paying over the Bitcoin network, the value of Bitcoins will need to rise or at least remain at high levels to accommodate such demand. On the other hand, if the number of Bitcoin transactions continues to increase, but its currency’s amount ceases to do so because it has a ceiling, then it will suffer from a deflationary bias.
This means that each Bitcoin will be revalued too much, and the prices of goods nominated in that currency will fall. Such a scenario is not positive for economic activity because the limit of bitcoins will limit its circulation. This may result in many people stopping to liquidate it, believing that it will only go up. In addition, this will cause a liquidity crunch, and, in the long run, the exchange market will be left to dry.
Why Bitcoin Can Never Be an Actual Currency
All money needs to do is provide a stable index of value for any goods available on the market. Fiat currencies such as the US dollar are excellent at this, and they also serve as legal tender. Bitcoin is not backed by any authority.
Summary
The crypto market experienced a significant downturn today. Bitcoin faced a notable drop from its all-time high, causing investors to panic sell to maximize profits. Unlike fiat currencies. Bitcoin’s fundamental differences with fiat currency are being highlighted amid a market correction phase.
Disclaimer
The views and opinions stated by the author, or any people named in this article, are for informational purposes only. They do not establish financial, investment, or other advice. Investing in or trading in stocks, cryptos or any other related indexes comes with a risk of financial loss.
Nancy J. Allen is a crypto enthusiast, with a major in macroeconomics and minor in business statistics. She believes that cryptocurrencies inspire people to be their own banks, and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning. She frequently researches, and posts content on the top altcoins, their theoretical working principles and technical price predictions.
