Bitcoin rates were in free fall again on Sunday afternoon, with the world’s No. 1 crypto plunging more than 50% from a high in the middle of April, amid yet another bout of volatility in the digital-asset market.
The crypto market’s weekend carnage drew the attention of bulls and market players, including billionaire Mark Cuban, who seemed to blame the downturn in part on excessive debt and betting on bitcoin alternatives.
The Great Unwind
The “Great Unwind,” as Bitcoin, Dogecoin, and Ethereum have crashed, has been dubbed by billionaire developer Mark Cuban.
Many famous cryptocurrencies have seen a significant drop in value in recent weeks. Bitcoin’s price has dropped from over $46,000 a week ago to under $33,000 at the time of publication. Dogecoin has also plummeted, falling from north of $0.50 on May 16 to less than $0.30 today, although Ethereum has dropped from over $3,500 last week to hovering about $2,000 today.
I think this is the "Great Unwind". Traders borrow to buy Eth, used eth to borrow alt/stable coin, used that to LP a high APY Pair, took the SLPs and staked them to maxout yield. The minute Eth drops to their Tragic Number, they had to Unwind. Unstake, Remove Liqudity, Repay.
— Mark Cuban (@mcuban) May 23, 2021
The decline in crypto expands a trend that has been in place for many days, fueled by fears of excessive exuberance in certain areas of the digital-asset market and worries regarding tightening control on the nascent industry.
The falls, on the other hand, could have harmed new buyers further.
To set the losses in perspective, bitcoin is already up 16 percent this year (it had been up more than 100 percent in the previous year), Ether is up 175 percent this year, and Dogecoin is up more than 5,800 percent this year.
China reiterated its intention to clamp down on digital currencies on Friday, while the US Treasury Department said it will impose anti-money-laundering laws and require that cryptocurrency transfers over $10,000 be disclosed to the government.
The fear and greed index, a widely used indicator of market anxiety, was at 14, signaling excessive fear, after reaching a high of greed last month of 55.
Bitcoin’s 2021 Run
In 2009, Bitcoin was launched as open-source software, making it the first decentralized cryptocurrency. One bitcoin has gone from being worth pennies to being worth tens of thousands of dollars today, with its value peaked earlier this year at more than $63,000.
Other cryptocurrencies, such as Dogecoin and Ethereum, have attracted investors due to their cheaper prices and the expectation that their value will rise in the coming years. The cryptocurrency business, on the other hand, remains unpredictable, with the value of different coins spiking and falling on a daily basis.
MicroStrategy spent $250 million in bitcoin as a treasury reserve currency in August 2020. Payments company Square invested around 1% of its overall assets ($50 million) in bitcoin in October 2020. PayPal revealed in November 2020 that all consumers in the United States will be able to purchase, store, and sell bitcoin via PayPal. Bitcoin reached a record all-time peak of $19,860 on November 30, 2020, surpassing the existing high from December 2017.
Alexander Vinnik, the operator of BTC-e, was found guilty of money fraud and sentenced to five years in prison in France, despite his refusal to testify at his conviction. Massachusetts Mutual Life Insurance Company reported in December 2020 that it had purchased $100 million in cryptocurrency, or 0.04 percent of its overall investment portfolio.
Elon Musk added #Bitcoin to his Twitter profile on January 19, 2021, tweeting “In hindsight, it was possible,” causing the stock to climb $5000 in an hour to $37,299. Microstrategy reported on January 25, 2021 that it would proceed to purchase bitcoin, with reserves of 70,784 worth $2.38 billion as of that date.
The declaration that Tesla had bought $1.5 billion in bitcoin and expected to begin accepting bitcoin as payment for cars on February 8, 2021 raised the bitcoin price to an all-time peak of $44,141.