Bitcoin Falls | Understand the reason for the fall of Bitcoin
Everyone's favorite cryptocurrency, Bitcoin, plummets. It looks like it's once again in a sideways movement, only this time downwards. After passing $29.000 USD, it seems that the market is starting to recover. The move had already been following month-long trends considered “bearish” by many, but some other factors were crucial for Bitcoin to plummet. Check out some reasons below.
Ban on China Mining Transactions and Operations
On Monday of this week, June 21, 2021, the central bank of China communicated to all financial institutions in the country the prohibition of any type of transactions or operations involving Bitcoin and other cryptocurrencies. Although the market was already following a movement where the trend was downward, this statement served to reinforce the negative sentiment surrounding the crypto assets market and helped Bitcoin to plummet.
This is not the first time that China has issued this statement, or that it has banned any kind of Bitcoin transactions. According to the website BTCTimes, China has a track record since 2013 of banning any type of transactions involving Bitcoin and other crypto assets. Bitcoin plummets this time mainly because most mining companies are located in Chinese territory.
The reasons given by Chinese authorities for the ban are due to risks of speculation and concerns about energy consumption. The curious thing about all this is that China's main banks began issuing and testing their cryptocurrency, the Digital Yuan, this month. Could this ban on Bitcoin be a sign that the Chinese are trying to force their population to adopt their digital currency?
Tether is constantly accused of being a scam
Tether is a cryptocurrency known as stablecoin, or stable currency. This means that its value is always equivalent to $1 USD. Over the past few months, there has been a buzz asking whether the Tether company is a legitimate company or a dismal institution as it is unregulated and has already been fined by the US financial authorities.
Furthermore, it is very unlikely that the company called Tether Limited will actually be able to cover up the entire tether today in circulation with dollars, as it is not backed by the USD for all the Tether issued in the market.
Although it appears to be confusing, the back-up process used by stablecoin Tether is the same as that used by banks, in an approach called fractional bank reserve system. However, banks are regulated and provide significant transparency about where they keep their money, which is not the case with Tether. Tether Limited also makes no legal guarantees to convert your Tether currency into US Dollars.
The explanation of the division of the company's reserves was published literally through An image. Cryptoeconomia made a free translation of the breakdown of Tether's reserves, released by the company in 2021.
Remembering that the company behind Tether only spoke out because it was thethanks for the attorney general of New York. The company, although not a subsidiary of the Bitfinex exchange, it belongs to the same owner and has even divided the same employees multiple times.
This simply means that Tether will continue to issue its currency without satisfying anyone, it will continue to inflate the cryptocurrency market.
Bitcoin price plummets with Elon Musk biased tweets
It can be said that Elon Musk, the CEO and founder of the Tesla company, has been manipulating the market through the Twitter platform. The man who was once the richest in the world in the year 2021, keeps making biased tweets that end up being interpreted by platform users as signals to buy and sell random cryptocurrencies like the Dogecoin e cum rocket.
Elon Musk also issued a note on his Twitter recently saying that car producer Tesla would no longer accept Bitcoins as payment for vehicles. His concern was with the supposed carbon emission that Bitcoin miners use, which would be a contribution to global pollution.
Tesla & Bitcoin pic.twitter.com/YSswJmVZhP
- Elon Musk (@elonmusk) May 12, 2021
Although his finding influenced the price and caused Bitcoin to fall for a while, tesla's $1.5b billion investment in Bitcoin still continues, and nothing has been said about getting back the amount invested. Elon musk later backtracked saying that it would only cease payments in Bitcoin for a temporary period, until an alternative was found for the energy used by Bitcoin miners.
Bitcoin plummets for a number of reasons, and it seems that all of them together were the crucial factor in starting the cryptocurrency winter. For many, this is a sign that Bitcoin and other cryptocurrencies are on sale. For others who fear most of their investments in crypto assets, this means a large loss of fiat currencies in their portfolio. Although 1 Bitcoin is always 1 Bitcoin, our world still revolves around the financial system and centralized currencies, so the dependence is high. Of all this, there is only one certainty: it will not be the first time that Bitcoin will be declared “dead” by newspapers and by the national and international media.
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