Bitcoin's price has dropped below $40K, but traders are optimistic that it will grow again in the future.
In the last 24 hours, Bitcoin has fallen 12.5 percent as China has reaffirmed its position on cryptocurrencies. It has outlawed the provision of cryptocurrency-related services by its financial institutions and payment firms. Ordinary Chinese citizens would find it much more difficult to invest in or trade in cryptos as a result of the ban. The country also has a firewalled internet, making it easier for authorities to impose restrictions.
The durability of Bitcoin's supporters is being put to the test in May, as the cryptocurrency has dropped nearly 40% from its mid-April high. It's now worth less than $40,000 per coin ($39,195 as of 12:30 p.m. on Wednesday), a significant drop from an all-time high of $64,829. Other cryptos, such as Ethereum and Dogecoin, are also showing signs of a bearish pattern.
Bitcoin is the most valuable currency, with a market capitalization of over $700 billion. It has a commanding lead in the race and has become a household name associated with cryptocurrencies. It's sometimes referred to as a "generalised crypto index" that can be used to gauge overall sentiment in the industry.
The 14-day Relative Strength Index (RSI) of bitcoin shows entry into oversold ranges, according to the charts and technical analysis. A drop below $40,000 also means bitcoin is checking its average price over the last 200 days, a mark it hasn't surpassed since September 2020.
The registration, negotiation, clearing, and settlement of digital currencies would be hampered by China's restrictions. The country has chosen to communicate via business bodies rather than regulating or banning cryptocurrency.
Also seasoned supporters like Elon Musk have taken a step back as countries continue to weigh their options. Tesla's CEO revealed last week that the company would no longer welcome bitcoin payments because the currency is not environmentally friendly. Bitcoin mining necessitates a significant amount of electricity, which is extracted using traditional methods such as coal and fossil fuels.
Despite the short-term carnage, according to a Bank of America report, "long bitcoin" is the most crowded exchange on the planet. It indicates that buyers believe the price will increase in the future and that the current slump will be temporary.
The most famous coin is facing stiff competition from Ethereum, the runner-up in terms of market capitalization. The Ethereum ecosystem is expected to expand due to its unique capabilities, reputation, and scale, according to research firm Two Prime. In terms of travel, Bitcoin and Ethereum have always followed the same route, but that is slowly changing. Because of the latest NFT (non-fungible tokens) craze, Ethereum is stepping out from under Bitcoin's shadow. In the eyes of the general public, it now has a distinguishing feature.
A digital ledger manages an NFT, which is a one-of-a-kind commodity that resides online. They can be assisted by Ethereum's blockchain, which can also grant a certificate of authenticity. This prevents online data from being easily manipulated or duplicated.