The price of Bitcoin, the world’s largest cryptocurrency asset, recently fell by 20 percent within 24 hours — down $48,000 from $58,000 — ushering in a flood of angst and panic among investors.
Other cryptocurrencies also experienced losses, including Ethereum, the world’s second largest cryptocurrency, which dropped below $1,600 to reach its lowest level in three weeks.
But, this isn’t the first time the market has experienced volatility, and it likely won’t be the last. As Paolo Ardoino, CTO at leading cryptocurrency exchange Bitfinex, has noted about this latest fall: “For many of the battle-tested exchanges that have weathered the market fluctuations, volatility isn’t new and is to be expected in such a young market.”
In fact, a similar crash happened several weeks ago, in the second week of January 2021, after the cryptocurrency market lost nearly $170 billion within a single day.
Furthermore, as far as percentages go, Bitcoin itself has experienced worse drops; in 2017, its price fell from $20,000 to $10,000. Even though it’s at its lowest price in about two weeks, Bitcoin has soared more than 50 percent this year — and is still up by around 500 percent compared to this time last year. In February alone, the cryptocurrency increased more than 75 percent from $33,000 to $58,000.
Considering Bitcoin’s historical data, there’s little reason for concern. Indeed, March has often been a period of correction for Bitcoin. For example, in March 2017, Bitcoin plunged by more than 15 percent; in March 2018, Bitcoin fell more than 32 percent; and last March, Bitcoin lost half its value in a two-day plunge, largely a result of the COVID-19 pandemic, which also affected the stock, gold and silver markets.
While market plunges are always unsettling, we know that markets never follow a straight trajectory and require corrections from time to time. There’s reason to remain optimistic about the price of Bitcoin and the cryptocurrency market in general.
In fact, the market continues to be boosted by institutional investors, and is receiving renewed interest from retail investors. On February 19, Bitcoin’s market value hit $1 trillion for the first time, spurred by Elon Musk’s Tesla $1.5 billion investment in Bitcoin earlier in the month, alongside announcements from Deutsche Bank and Bank of New York Mellon -- America’s oldest bank -- allowing clients to hold Bitcoin in their portfolios. Business software company MicroStrategy MSTR also announced that it was issuing $600 billion in bonds to buy Bitcoin.
Furthermore, some analysts have even predicted that Bitcoin’s price could rise above $100,000 in 2021, similar to the significant price rallies it experienced in 2013 and 2017.
Regardless of the expected ebbs and flows of the market, we’re confident in cryptocurrency’s future and the promises it holds for increased transparency, greater efficiency and less bureaucracy within the financial landscape.
Ardoino said it well: “Today’s price movement may galvanize bitcoin’s many critics, including those who recently dismissed the leading cryptocurrency as an economic sideshow. Such criticism misses the point and the profound impact it is starting to have...[f]or many in the industry, development and deployment is priority. Price movements are more of a sideshow.”
Indeed, as a company at the forefront of the cryptocurrency mining industry and growing decentralized finance movement, we couldn’t agree more.