The cryptocurrency market is extremely active and has suffered serious losses as a result of recent developments. That being the case, investors began to wonder why cryptocurrency prices fell. We will explain in detail why Bitcoin (BTC) cryptocurrencies fell for you.
In this guide, we will talk about why Bitcoin is falling, how effective Bitcoin last minute comments are, when Bitcoin rises after the drops and the latest situation in Bitcoin.
1- Overvaluation in Cryptocurrencies
Before the last drop, Bitcoin fell at different levels, and we can say that this situation followed the same in the market throughout other cryptocurrencies. There can be a lot of overvaluation in cryptocurrencies, especially in Bitcoin, and this can lead to large sales for people who trade cryptocurrencies to realize their profits, and therefore, decreases in crypto money prices may occur. These decreases are often on the financial markets and we can say that if the foundation of the projects is solid, they will increase in the long run.
Analysts state that from time to time, Bitcoin and altcoins rise excessively in crypto currency comments, and therefore bubbles are formed. Due to extreme rises, cryptocurrencies can go to sharp price corrections later. For this reason, the first answer to the question “Why is the Bitcoin price falling” can be given as an overvaluation answer.
2- Panic Sales
Panic sales, usually rumors about a project, government regulations and different developments, especially statements from different channels, can trigger panic selling in crypto money markets and Bitcoin. Especially when the recent developments in the cryptocurrency market, combined with the panic selling and uncertainty in the market, can have serious consequences and drive the market further down.
Why are cryptocurrencies falling, how effective is the breaking news in these declines? In summary, statements made by leading individuals or institutions may lead to panic selling in cryptocurrencies. For this reason, the first answer to the question “Why is cryptocurrencies falling” can be given as an overvaluation answer.
3- Investor Psychology
We can say that psychology has a great impact on crypto money markets, including all financial markets. When states and organizations in the crypto money markets come up with developments that will positively affect the market, an optimistic psychology is formed as a result of the positive atmosphere in the market, but in case of the opposite situation, the investor psychology turns to the opposite situation. When this is combined with panic selling and stop orders, we can see that it has devastating effects on the cryptocurrency markets. At the beginning of the year, the WallStreetBets subreddit, which made a significant part of this situation, was suddenly sold after it completed the process of increasing its market value by simultaneously buying Dogecoin (DOGE) at a high level and attracting others. Another example is the sudden sell-off in the cryptocurrency markets after Tesla and SpaceX CEO Elon Musk said he would accept Bitcoin and Dogecoin for Teslas, and that the company also bought $1.5 billion in Bitcoin. In the third example, the US Treasury Secretary Janet Yellen’s statement that Bitcoin was a bubble was also effective in lowering the price of Bitcoin. For this reason, investor psychology can be given as another answer to the question of why the crypto money is falling.
4- Regulations
We can say that governments are in a position to influence the markets by issuing regulations. Therefore, the regulations issued by the states, especially the big states, are very effective on the crypto money market. The latest regulations that took place this year have had a devastating effect on the cryptocurrency market. First of all, it is possible to say that the sales that took place as a result of China’s ban on cryptocurrencies decreased the value of cryptocurrencies. The market values of cryptocurrencies fell as a result of the raids organized by the provinces in China banning Bitcoin and Ethereum (ETH) mining, as a result of which most of the mining activities were stopped. In addition, we can say that a collapse occurred in the crypto money markets with the selling pressure that occurred with the desire of Chinese citizens to exit at the same time, with China’s ban on crypto currency exchanges. In addition, we can say that the crypto money has been reduced because the people who are active in the market sell their crypto money in their hands and transfer to cash.
5- Decrease in Hash Rates
As some of the values of mining-based cryptocurrencies such as Bitcoin work with mining, it allows them to maintain and increase their value with increasing hash power and decreasing supply. However, the serious decrease in hash levels, as in recent days, seriously affects the values of Bitcoin and mining-based cryptocurrencies. Especially after China banned mining activities and decided to arrest those who carried out mining activities, some of the miners sold their equipment and left the market completely. The rest of the miners, on the other hand, are trying to move all of their equipment to countries that allow cryptocurrency mining, which lowered the mining levels and caused the prices of cryptocurrencies to fall. This can explain the declines in the prices of cryptocurrencies, especially Bitcoin, if we take into account that it takes a certain time before mining companies install their own devices in other regions.
You can follow the movements in the hash rate by looking at the crypto currency comments of on-chain analysts. Since altcoin prices are related to Bitcoin, after the BTC hash rate decreases, altcoins may also experience depreciation. For this reason, movements in the hash rate can be shown in response to the question of why cryptocurrencies are falling.
6- Updates
We can say that there are usually decreases before the update in cryptocurrencies. This can happen especially in mining-based cryptocurrencies or cryptocurrencies that try to return to a different algorithm from mining. Also, with the updates that the miners do not accept, the prices of cryptocurrencies may hit the bottom completely. As a result of this situation, cryptocurrency prices may be adversely affected as different conditions are in the account during cryptocurrency updates.
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