Cryptocurrencies Tumble in April – What Comes Next?

FXOpen

Over the weekend, the cryptocurrency market took another tumble. Bitcoin fell more than 10% and tested the $32k level before bouncing. Also, Ethereum and other cryptocurrencies have lost more, with most of the coins down over 50% in April.

It all started with Elon Musk, the CEO of Tesla, tweeting at the start of the trading month that the company will not accept Bitcoin as payment for the purchasing of its electric vehicles. As such, Bitcoin collapsed, and other digital assets followed the same path.

Cryptocurrencies Tumble in April – What Comes Next?

Is It the First Time When Bitcoin Drops That Much?

A quick check at the Bitcoin’s price history reveals that such a drop is actually part of the way the asset moves. Throughout history, Bitcoin lost over 80% of its value three times – in 2013, 2016, and 2018.

Some other times, it frequently lost more than 40% of its value. Yet, Bitcoin did found its way out of it, although the volatility is not for the everyone.

Cryptocurrencies Tumble in April – What Comes Next?

If we look at what happened in May so far, Bitcoin’s price corrected from over $60k close to $30k. That is a drop of 50% in less than a month.

This is a problem not only for the crypto assets but for traditional financial assets too. One must remember how Bitcoin’s adoption has increased among institutional investors lately, and such a drop may end up posing a systemic risk to markets.

It did not, so far, as the equity markets remain stable. However, the declines in some crypto assets are so steep that institutional investors that adopted crypto have some explaining to do to their clients.

All in all, the move lower in Bitcoin is not unusual if we check historical prices. The only thing that is different at this point is that the move lower does not affect only retail traders anymore but also institutional investors. If the bearish market continues, the risk of seeing some spillovers in the traditional markets increases exponentially.

FXOpen offers the world's most popular cryptocurrency CFDs*, including Bitcoin and Ethereum. Floating spreads, 1:2 leverage — at your service. Open your trading account now or learn more about crypto CFD trading with FXOpen.

*At FXOpen UK and FXOpen AU, Cryptocurrency CFDs are only available for trading by those clients categorised as Professional clients under FCA Rules and Professional clients under ASIC Rules respectively. They are not available for trading by Retail clients.

This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

Latest from Cryptocurrencies

Bitcoin Price Losing Correlation with Stock Market Kiyosaki Predicts: Bitcoin at $350k in August 2024. Realistic? The Price of Ethereum Rises Ahead of SEC Decision Bitcoin Price Hits a Month's High, Breaking Key Resistance April Became the Worst Month for BTC/USD Since November 2022

Latest articles

Shares

TSLA Shares Revive After Shareholder Meeting

Last week, Tesla held a shareholder meeting where the main events included:
→ Shareholders approving Elon Musk’s $56 billion compensation package in TSLA stock options;
→ Relocating the company’s legal headquarters to Texas;
→ Elon Musk’s statements on robotics, asserting

What Is a Petrodollar and How Does It Affect the Global Economy?
Trader’s Tools

What Is a Petrodollar and How Does It Affect the Global Economy?

The concept of petrodollars is an insightful topic to study. The petrodollar isn’t a specific currency but a financial system that reflects economic and political forces that have shaped international relations for decades. This concept is critical to understanding

Indices

Nasdaq 100 Index Reaches 20,000 Points for the First Time

On 30 May, we noted some uncertainty in the price behaviour of the Nasdaq 100 (US Tech 100 mini on FXOpen) near the resistance level of 18,840, as shown by arrow #1.

Following this, the price declined and tested

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 60% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.