Based on how things were going, this year was supposed to be the most successful cryptocurrency year. Banks and other financial institutions were finally opening up to Crypto, governments were beginning to embrace Bitcoin and multiple retailers had also gotten on board.
Elon Musk reestablished himself as a critical pillar in the crypto sphere and singlehandedly made Dogecoin a success. This is the same year that birthed hundreds if not thousands of overnight Cryptocurrency millionaires. The number of Crypto traders and investors increased exponentially, it’s almost impossible to keep up with the constantly increasing number of digital wallets. We witness a new Cryptocurrency token or project being launched daily and don’t even get me started on shitcoins.
An interesting turn of events
In February of this year, Tesla announced that they had started accepting Bitcoin as payment for their services. This was after the company bought $1.5 Billion worth of Bitcoin shares. As a result, both Tesla and Bitcoin experienced a significant increase in their market price. Finally, things were beginning to look up for Cryptocurrency and the world was about to realize its full potential.
However, recently Elon Musk made an announcement that sent shock waves across the Crypto sphere. He announced that Bitcoin mining had extreme energy requirements which caused Tesla to withdraw Bitcoin as a payment option for their customers. Musk claimed that although Bitcoin has a promising future, its cost was much too great on the environment. He stated concern over the increased use of fossil fuel for Bitcoin mining which has dangerous emissions.
The market crash begins (reasons behind it)
Musk has been a long-time Cryptocurrency advocate; it’s therefore not shocking that this statement was felt across the market. Not only did Bitcoin’s price plummet but other digital tokens also followed suit result in a general market crash. These included Bitcoin, Ethereum, Dogecoin, and BNB among many others.
Barely a week later, came China’s crackdown on Cryptocurrency. China announced yet another Crypto regulation that has forced investors to dump their mining equipment. The price of Bitcoin and other leading cryptocurrencies plummeted even further. China damped down on ICO, block exchanges, and warned against speculative trading.
The final blow was dealt when China ordered Bitcoin mining in its Sichuan province to shut down completely. The government went as far as ordering banks to stop supporting Cryptocurrency transactions.
Could things worsen?
Although the market will recover in due course, things are likely to get worse in the immediate future especially with the looming Evergrande nightmare. For those who are not aware, Evergrande is a Chinese Real estate giant. It has its own soccer team and bottled water business. It is the most independent real estate company in the world and thus a key player in the Chinese economy.
However, after years of heavy borrowing, the company owes more than $300 Billion in debt. Last week, the company announced that it may default on this debt. This will not just affect China’s economy but that of countries everywhere.
If Evergrande goes bust, it could drag down Tether and other Cryptocurrencies.