Nine things you need to know about cryptocurrency market

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The year 2021 has been a rollercoaster for Cryptocurrencies. After soaring to all-time highs, the market witnessed multiple crashes. There has been a lot of news flow and confusion surrounding it. What should we make out of all this? Here are the 9 things that you need to know

Crypto at an all-time high in April

Crypto market was at an all-time high in April due to US-based crypto exchange Coinbase’s public listing. That directly meant a main stream adoption of cryptocurrencies. When Coinbase stocks listed on April 14, 2021, the Bitcoin was at $64k.

High volatility

Historically on an average the volatility in Bitcoin is about 75% whereas the S&P 500 daily volatility is about 22%. So that makes the Bitcoin 4 times more volatile.

China’s stance

The most recent Crypto market crash on the 22nd of June is attributed to China imposing stricter restrictions on crypto miners. China did announce a wholesale policy to shut down all crypto mining in the country a month ago… and that news had also caused a crash in the crypto market at the time. Just that this time around it actually started implementing it by shutting down mines in its Sichuan province. So you can expect any further developments on this front to cause more grief to cryptocurrencies. And that’s because nearly 60% of crypto mining in the world happens in China.

Sustained volatility

One of the most interesting points to note during recent crypto crash of 2021 was that the market still sustained the volatility, especially the decentralised exchanges like uniswap did not face any down time.

Environmental sustainability

Another important factor affecting cryptocurrencies are the mood swings of a man named Elon Musk and his tweets…both for the good and the bad. The billionaire entrepreneur caused a crash when he announced that Tesla will not be accepting bitcoin as means of payment for Tesla cars. But he has since retracted from that hard stance and is campaigning for environmental sustainability in the mining of bitcoin and other cryptocurrencies. Crypto mining supposedly consumes electricity of an entire European country every year!

High return despite 30% fall

Historically, Bitcoin fell more than 80% from 2013 to 2015 and again from 2017 to 2018. This is now the 10th time since 2017 that Bitcoin has fallen 30% or more from an all-time high. Despite these losses, Bitcoin is up 30x since the start of 2017.

Faster recovery

The 2021 crash is being viewed by crypto experts as a more mature one than the 2017 crash. And that’s because there is higher institutional adoption of cryptocurrencies now, which according to them improves the chances of a faster recovery than was possible before.

Increasing accumulation

Microstrategy and other Institutions are still continuing to accumulate cryptocurrencies at a higher speed, including bitcoin at current  prices of around $33k.

Federal intervention

Indian regulatory framework development is still a work in progress with a new inter ministerial committee constituted, which is expected to look into cryptocurrencies…maybe as an ‘asset class’…since the govt has been using the term ‘crypto asset’. This is further backed by the fact that RBI  allowed banking access to crypto entities on May 31st this year. But the govt has also shown its intent to create its own centralised digital currency that would completely outlaw all others. So things very much hang in the balance.