The meltdown in the crypto market is not driven by just one reason. There is a bunch of 5 factors for the bloodbath.
The Crypto market took a brutal hit on Wednesday when Bitcoin fell 30% to $32 000. Other cryptocurrencies like Eth and DOGE fell even further. More than $500B went out of the crypto market.
After many lost more than ⅓ of their crypto investment everyone is searching for answers. On the other side, the answer is not as easy as we think. Here are the 5 reasons for the drop.
On Tuesday Reuters posted that China bans all of the cryptocurrencies. The real news is not as dramatic. The actual news is that the country’s central bank and a handful of payment firms had simply restated rules limiting crypto transactions that have been in place since 2017.
Even though the title by Reuters led to more newbies selling their crypto.
Last week Tesla’s CEO was unsurprisingly active on Twitter but this time not talking about Dogecoin. He was commenting on Bitcoin. According to Musk Bitcoin uses a big amount of electricity and to help the environment Tesla will stop accepting BTC for its products.
During the weekend the discussion went even further but in the end, Elon stated that Tesla didn’t sell any Bitcoin.
Leverage positions got liquidated
Leverage is one of the best ways to earn a lot of money in a short time. Bit only if you are sure that the price will be steady or will go up. When the price drops you have to put more collateral or you will be liquidated by the broker.
This is what happened yesterday. More than $9B positions were liquidated causing the market to continue falling.
After the company behind Tether and the New You Attorney general settled, the business should report its reserves every Q.
In the report for Q1, it is said that most of the USDT is backed by cash and a combination of commercial paper and various loans. The last two are assets with high liquidity depending on the entity that issues the loan. Meanwhile, Tether refuses to give additional information for the loan and to employ a standard auditor.
The crash of the market concludes with a deadline for Tether to send new financial reports to New York’s Attorney General.
Every who traded with crypto during the last year made a great profit. Now it is time to pay the taxes. May 17 is the last day for every American citizen to declare their income for the last year. According to the analysis some investors had to send part of their crypto in order to pay to the USA.
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