Bitcoin, the first and most popular cryptocurrency on the market, seems to be affected by more and more elements in the economy than it was expected in the beginning. Usually, the price of crypto can change in accordance with media coverage, investor sentiment and supply and demand. However, as it developed and reached new features, the cost of Bitcoin wavered with almost no signs beforehand. Investors are barely keeping up with the bullish and bearish trends, as mere market aspects trigger them and can appear in a matter of days.
While there are numerous platforms for newbies to learn where to buy Bitcoin and leverage it for the long term, owning the coin can be challenging if there are unusual events that affect the price dramatically. For example, the latest controversy regarding Bitcoin’s price is how Elon Musk altered it. Is the situation with Dogecoin repeating with Bitcoin too?
Elon Musk does it again but with Bitcoin
Elon Musk is known as an avid crypto investor, but given he’s one of the most vocal on social media, his power affected the price of these assets. In 2022, one of his tweets about Dogecoin, inspired by the Doge meme, created an entire stir on the internet when its price skyrocketed only a few hours following the event. Still, a few Dogecoin investors decided to file a lawsuit against him and the two companies he owns, considering they’ve all contributed to pumping the cryptocurrency.
Since then, Musk has done all sorts of things with his new platform, X, the old Twitter we know. Rumors say that the app might introduce Dogecoin as a reliable payment method. Still, until that, Musk is believed to have worked with other Dogecoin developers to work on a better alternative to Bitcoin.
But what happened to Bitcoin?
SpaceX, the company that previously owned Bitcoins, apparently got rid of $373 million in Bitcoin holdings, but some sources state the business offloaded only a part of these coins. Regardless, what it did to Bitcoin is that it caused a considerable sudden price drop, which contributed to the weak performance of Bitcoin in the last months.
Experts believe that influential figures have a massive impact on the general investor sentiment, and each time something like this happens, investors lose the considerable value of their assets due to someone’s playfulness.
Still, this is not the only reason for Bitcoin’s fall
Of course, when someone like Elon Musk tweets something about a cryptocurrency, it’s more than possible for this event to have consequences. However, it takes more than that for Bitcoin’s price to have such a dramatic fall.
For example, the rise in government bond yields might’ve triggered a liquidity reduction for the regular market, seriously impacting the Chinese environment. But the Chinese Yuan is still a risk to Bitcoin, which could be explained through the latest devaluation of the fiat currency that had a strong link with Bitcoin’s price decrease. This might be because China has one of the biggest crypto markets since numerous investors here favor Bitcoin.
Why is the price of Bitcoin so important?
You may wonder why there’s such a fuss over the change in Bitcoin’s price. Well, the assets are the most important to the market, and it expanded so much that it’s supposed to become adopted globally as legal tender. Governments are making considerable efforts to include it in their economies so that anyone can use it and reap its benefits while also being regulated.
At the same time, it has been shown over time that the price of Bitcoin affects other cryptocurrencies, changing the entire crypto market. Given that all other assets are considered stablecoins, which are basically Bitcoin alternatives, their performance is linked with Bitcoin’s, which is a significant risk for investors. That’s because they are constantly diversifying their portfolios with all sorts of digital assets, but if all are performing poorly, there’s no way of leveraging the benefits of crypto.
Unfortunately, it may be possible for these ups and downs to continue in the crypto sector, at least until more regulation is provided. There are many other aspects included in Bitcoin’s performance, such as the frequent halving or its limited coin cap, when it’s supposed for the last Bitcoin to be mined around 2140.
Still, identifying a single factor for Bitcoin’s change in price is impossible
Bitcoin lives on a decentralized blockchain, which is both a good thing and a bad thing. Blockchains offer top-notch security and don’t need governments or other institutions to function, allowing developers, investors and regular users to explore its possibilities freely. On the other hand, controlling the blockchain and the market ecosystem isn’t that easy. It’s just a matter of what factor combination has the most impact on investor’s sentiments.
When people saw that Elon Musk, one of the most prominent figures in the online ecosystem, supported a minor and unimportant asset like Dogecoin, they all hoped for the cryptocurrency. They added it to their portfolios since its value might’ve increased overnight ―which happened.
This happened to Bitcoin too. His company is known for the Starship program and its aims for more missions in space, an impressive goal. Still, when such a vital authority gives up on a huge number of Bitcoins, regular holders might automatically decrease their investment input in
Bitcoin and move to some of his most preferred altcoins, most inspired by memes. Regardless, 2023 was the year when meme assets were the most famous, some of which being Pepe coin, Shiba Inu and Dogecoin. Sometimes, following market trends is the best thing to do as an investor, but these short-term investments are not made to secure long-term commitments.
What are your thoughts on Bitcoin’s price?
While many consider SpaceX responsible for Bitcoin’s price fall, there are multiple reasons for 2023 not being the best year for this cryptocurrency. Government regulations might put more pressure on investors, and the general sentiment isn’t that positive considering the worldwide economy and the development of social events.