4 Reasons Bitcoin Has Gone Bearish

However, most speculators believed that the bullishness was just a ‘bubble’ and that it would soon retreat to normal trading levels of around $30k to $40k.

True to these predictions, Bitcoin started its meltdown in April, and its price almost hit $30,000. The previous bullishness was caused by the acceptance of Bitcoin as a means of payment, and it was also added to the portfolio of major banking giants such as JPMorgan and Goldman Sachs.

The following reasons caused the Bitcoin crash:

Tesla’s ‘Breakup’ with Bitcoin

Bitcoin bulls in April were mainly attributed to the acceptance of the token as a means of payment by Tesla, an electric car manufacturing company. The news led to a growing interest in crypto, and Bitcoin went to a level above $60,000.

However, less than two months later, the CEO of Tesla, Elon Musk, announced that the electric car manufacturer had suspended accepting Bitcoin as a means of payment for its cars because of environmental concerns. The news led to a market turmoil, and the token started losing its value.

China’s Crackdown on Crypto Operations

Shortly after Musk’s announcement, China barred financial institutions and payment firms from offering services allowing cryptocurrency transactions. The banned services included registration, trading, clearing, and settlement. According to Chinese authorities, Bitcoin posed a real threat to financial stability since it did not have any real value.

Beijing shortly after cracked down on mining firms in the region, and most crypto mining firms closed China operations because of regulatory risk. Some of the firms that stopped their Bitcoin mining operations in China include Huobi and BTC.TOP.

The China crackdown on crypto markets fuelled the crash to below $40,000, and Bitcoin has been unable to rise past the $40,000 level.

Regulatory Concerns

After the highly bullish crypto market that occurred in the first quarter of 2021, regulators have grown wary of how they can regulate the market to protect economies and protect investors.

Gary Gensler, chair of the US Securities and Exchange Commission (SEC), stated that the crypto market needed to regulate to protect investors. The US Treasury, through Jerome Powell, also added that it could pose a risk to financial stability if the crypto market were not regulated. These concerns led to Bitcoin bears as investors started selling off to escape any harsh future regulations that may further harm the crypto.

Weakening Institutional Support

The overwhelming institutional support that fuelled Bitcoin bulls in Q1 2021 is slowing down, leading to the decreasing value of the token. Coinbase, a leading cryptocurrency exchange platform, went public on April 14, around the time of Bitcoin’s ATH. At the time of going public, Coinbase shares were going for over $400 but have since retreated to around $220.

JPMorgan, a Wall Street banking giant that had earlier endorsed Bitcoin citing growing client interests, issued a report in May saying that institutional investors were shying away from Bitcoin and were focusing on gold. The news harmed Bitcoin, as it made the token lose the overwhelming glory it had gained in April.

As much as Bitcoin’s bears have been the greatest blow in the crypto market, the coin shows resistance, and the crypto community remains optimistic that the market will recover. Large whale addresses have been buying in the dip, and the recently completed Bitcoin2021 Conference is expected to reinstate investor confidence in Bitcoin. Nevertheless, it remains to be seen whether the coin will achieve the $100,000 price prediction by the end of 2021.

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