Reliving The FUD That Led To This Week’s Bitcoin Crash
It is the worst of times. It is the best of times. It is the age of fear, uncertainty, and doubt. Nevertheless, Bitcoin’s fundamentals remain intact. The project’s value is still there, despite the disastrous drop in price. It was all going so well. How did we get here? Actually, there are a lot of valid reasons. Let’s review all of the causes that lead to this FUD.
As you know, everything started through Elon Musk’s fingertips…
Tesla’s “Environmental Concerns”
When Bitcoin was on its way up, Elon’s company gave it the push it needed. Tesla announced ownership of $1.5B worth of Bitcoin that, apparently, remain on its balance sheet. The crypto community celebrated the move, profits followed. The coin’s legitimization seemed to take a step forward. And then…
Inexplicably, Tesla announced they were discontinuing accepting BTC as a form payment. Despite wild speculation, no one knows what happened. In his tweeted announcement, Elon cited “rapidly increasing use of fossil fuels for Bitcoin mining” as the reason. Few people inside the crypto community believed it. Everyone outside of it did. And even though Tesla clarifies they didn’t sell any of their Bitcoin, the FUD set in. And retail investors started selling.
If you want to learn about Elon’s real views on the matter and about everything the crypto mining industry is doing regarding green energy, head over to Bitcoinist, our sister site.
Related Reading | Bitcoin TA: Here’s What Could Trigger A Bullish Reversal Above $40K
China’s Tightening Up Its Bitcoin Policies
This generated lots of FUD. The People’s Bank of China seemed to announce clear and unfavorable rules regarding cryptocurrencies. Yahoo Finance reports:
“This is the latest chapter of China tightening the noose around crypto,” said Antoni Trenchev, managing partner and co-founder of Nexo in London, a crypto lender.
Virtual currencies should not and cannot be used in the market because they’re not real currencies, according to a notice posted on the PBOC’s official WeChat account. Financial and payments institutions are not allowed to price products or services with virtual currency, the notice said.
Nevertheless, as with most things on this list, the announcement didn’t amount to anything specific yet.
BTC price chart on Bitstamp | Source: BTC/USD on TradingView.com
The US OCC Turns Its Eye To Cryptocurrencies
The newly announced Acting Comptroller of the Currency, Michael Hsu, revealed that the agency he presides, the Federal Reserve, and the FDIC are reviewing their policies on cryptocurrencies. This isn’t necessarily a bad thing, it might lead to clearer laws and stronger governmental support. Nevertheless, FUD doesn’t mind that fact. And FUD settled in.
Hsu’s statement to the Committee Of Financial Services reads:
Shortly after I started, I requested a review of key regulatory standards and matters pending before the agency. Those items include the 2020 Community Reinvestment Act (CRA) final rule and associated NPR related to performance benchmarks, interpretative letters and guidance regarding cryptocurrencies and digital assets, and pending licensing decisions. For each, the review is considering a full range of internal and external views, the impact of changed circumstances, and a range of alternatives.
Binance Under Investigation
The US government turned its eye towards Binance. Apparently, blockchain investigator firm Chainalysis found a pattern that showed a considerably higher percentage of funds from criminal enterprises flowed through Binance, compared to other exchanges. Bitcoin Magazine reports:
The world’s largest cryptocurrency exchange, Binance, is under investigation by the U.S. Department of Justice and Internal Revenue Service (IRS), according to a report from Bloomberg.
“As part of the inquiry, officials who probe money laundering and tax offenses have sought information from individuals with insight into Binance’s business.”
Even though it’s just an inquiry and nothing might come of it, the FUD it generated within the community cannot be ignored.
Related Reading | Market Sentiment Hits Low As Binance Has Largest Bitcoin Inflow Ever
India almost bans cryptocurrencies
A total crypto prohibition was on the table once again, but India’s lawmakers turned the ship at the last minute. Word on the street is that they’ll pass clearer regulatory laws instead. The Economic Times reports:
The central government may form a fresh panel of experts to study the possibility of regulating cryptocurrency in India, three sources privy of the discussions told ET. This comes amid the prevailing view that the recommendations by a committee headed by former finance secretary Subhash Garg in 2019 for a blanket ban on these assets had become outdated.
This new rumor arrived yesterday, but the FUD that a total ban inspires was around for a while.
Is This A Coordinated Attack? Or Is The World Just Going Nuts?
We can’t confirm or deny this was a coordinated attack on Bitcoin. Maybe the upper class, transnational corporations, and high rollers of all kinds want to buy your BTC at a discount. Market manipulation is as old as markets. But, maybe, this perfect storm of bad news is what happens when the best performing asset that the world has ever seen takes over the world’s headlines. All eyes turn to it, and all fingers start poking.
crypto vets pic.twitter.com/nsDzzLzMtv
— CMS Intern (@cmsintern) May 19, 2021
Featured Image by Jasmin Sessler on Unsplash - Charts by TradingView