MAJOR CRYPTOCURRENCY NEWS OF MAY
Table of Contents
The past month has been eventful in the Cryptocurrency world. Bitcoin and other cryptocurrencies have been on a strong uptrend since the beginning of this year and so most traders who bought bitcoin when the price was low had nothing to worry about because they felt safe and were expecting bitcoin to go further than the $63,000 mark. But the month of May was different from the other months of the year. The price of bitcoin faced south this last month with the price of bitcoin dropping to $30,000 which is more than half of the price from its all-time high. This caused a lot of panic around the world with traders selling out from the market to save whatever is left of what they have invested.
Fundamentally, the fall in the price of bitcoin was caused by major news as many high-profile people voiced their opinion about the cryptocurrency market. Explained below are the recap of the major news of the past month. Although May is one of those months most cryptocurrency traders will wish to forget, yet not all of the news relating was bad news. Some made a positive impact in the market which will be beneficial in the long run.
1. The warning by the Governor of the Bank of England
When it comes to cryptocurrency, Andrew Bailey who is the Governor of the Bank of England is very pessimistic about investing in it. To put it in his exact word he said: “Buy them only if you’re prepared to lose all your money.” This is big news considering that it is coming from someone with a decorated profile who has a wealth of knowledge in the financial market.
The statement was made by the Governor when he was asked about the rising price of cryptocurrencies. Most of the cryptocurrencies have risen over 500% which is not the kind of profit margin a lot of persons are used to and as a financial analyst, the Governor felt it was unusual and could crash at any time suggesting that the tokens and coins don’t have any intrinsic value.
He was very blunt about his opinion. He felt that bitcoin and other coins have an extrinsic value which is the value that people attach to it but that there is no intrinsic value to protect it. The extrinsic value comes from people who see bitcoin as a store of value just like the Gold metal due to its limited supply because only 21 million Bitcoin can ever be minted.
Even with all the promises of high return that comes with bitcoin and other coins, many persons, on hearing the Governor of the Bank of England will be skeptical about investing their hard-earned money into the asset, and those who have already invested might go-ahead to withdraw what they have invested.
The bank of England Governor’s opinion didn’t make much impact in the market but with the series of other news, it will be said by many that it was a warning sign.
2. Tesla rejects Bitcoin as a payment option.
The CEO of Tesla Elon Musk in the second week of May announced the rejection of Bitcoin as a payment option for his company. The announcement was made through his Twitter handle. The announcement caused the cryptocurrency market to dip as a lot of persons pulled out their money. This announcement was coming from someone who invested the sum of $1.5 billion in bitcoin in February through the Coinbase platform and later went ahead to adopt it as his company’s payment option that same month. The adoption announcement caused the market to rally high in February as many persons were encouraged to invest their money to avoid being left behind in the cryptocurrency world. This was why his recent announcement that has left the market in bad shape came as a shock to many crypto believers and other persons around the world. Due to the announcement, the cryptocurrency market lost about $300 billion that day.
The reason he gave for rejecting bitcoin as a payment option was because the mining of bitcoin consumes a lot of energy which encourages the of coal. Coal is detrimental to the environment and so even when he clearly stated that bitcoin has a promising future, he also said that it shouldn’t come at a great cost to the environment.
Although the announcement made a lot of persons lose money as they fearfully sold part or all of their portfolio, others who didn’t invest in any cryptocurrency would go with him especially those that care about the environment. It has been estimated that the energy used by Bitcoin is more than the energy used by the entire country of Argentina. Even Bill Gates voiced his opinion during February. He said that Bitcoin uses more energy per transaction than any other method which makes it not to be great for the environment.
3. Tesla Considers adopting Dogecoin as a payment option.
After Tesla rejected bitcoin, they plan to adopt Dogecoin as a payment option. The coin which started as a joke in 2013 is now being taken seriously by so many investors as it has risen astronomically over the years most especially the last year. Elon Musk sees it as an alternative to Bitcoin because it consumes lesser energy per transaction. And so, on the 11th of May, through its Twitter handle, asked how many people would want Tesla to use Dogecoin as a payment option. He set up a Twitter poll for it and at the end of the day, a total of 3,922,516 people voted. From the total number of votes, 78.2% wanted the company to adopt Dogecoin while the remaining 21.8% were against the idea.
During the time of the announcement, Dogecoin increased in value from $0.46 to $0.54 even when Bitcoin was on a downtrend. People saw the tweet of Elon Musk as a form of validation to buy the coin.
4. China warns of Crypto crackdown
China has long made its displeasure about the use of bitcoin and other cryptocurrencies known to the world. The recent warning from China is not the first. Back in 2013, financial institutions in China were banned from handling bitcoin transactions by its Central Bank. In 2017, the authorities termed the initial coin offering (ICO) as illegal activity on Chinese soil. ICO is the process of raising funds for a cryptocurrency. That announcement made bitcoin lose 6% of its value at that time.
China recently released a statement reiterating its ban on the usage of cryptocurrency. One of the reasons for the ban was the volatility of the market which makes cryptocurrency an unsafe asset for people to invest in. They also feared that bitcoin and other cryptocurrency investment has caused more harm than good to the normal economic and financial order.
The government promises to crack down on bitcoin mining and trading behavior. This is not good news for cryptocurrencies because the largest mining location in the world is China. They are responsible for 65 percent of the bitcoin hash rate. It is no surprise that sometime in April, the fall of bitcoin was attributed to the blackout in some parts of China as people were not able to mine bitcoin due to the unavailability of electricity.
Also, three bodies of the Chinese banking and payment industry agreed, and they released a statement that forbids financial institutions from offering crypto-related services like trading and the exchanging of fiat currency for cryptocurrencies.
Due to the intensification of the crackdown of cryptocurrency in Beijing, many top companies had to halt their activities and restructure their objectives. For instance, a cryptocurrency mining pool called HashCrow announced after the threat by the Chinese authority that they will stop buying new bitcoin rigs. BTC.TOP also announced that they will halt their business citing regulatory risks. Additionally, Huobi which is a big cryptocurrency exchange platform stopped both their crypto-mining activities and refused to allow new clients from mainland China to partake in some trading activities. Rather, they shifted their focus to overseas businesses. Such activities as these will affect the general cryptocurrency market.
5. United States regulators signal stronger risk, tax oversight for cryptocurrencies.
Even when bitcoin was already 30% down, the U.S. Treasury didn’t wait before dishing out claims that would affect the market. Jerome Powell who is the U.S. Federal Reserve Chief stated that the cryptocurrency market is posing a great risk to financial stability and suggested that this may warrant the regulation of the electronic currency. Even though he acknowledged the need for financial advancement, he pointed out that cryptocurrency is risky both for its users and the financial system at large. He went ahead to speak about the plan of the Fed to have a digital version of the U.S. dollar. Due to the swing in the value of cryptocurrencies, Powell feels that cryptocurrencies have not served the purpose of being a convenient way to make payments.
Furthermore, the treasury department has expressed its fears that wealthy individuals could use cryptocurrency as a means of avoiding tax since it’s unregulated. They are suggesting that big cryptocurrency transfers should be reported to the authority. If the treasury department goes ahead to enforce such a plan, it means the idea of Bitcoin and other cryptocurrencies being decentralized will be defeated.
6. Ray Dalio made his stance known about Bitcoin.
Ray Dalio let the public know about his opinion on bitcoin and admitted that he bought some bitcoin without stating the worth of his bitcoin. He is an American billionaire who has served as the co-chief investment officer of Bridgewater Associates, the largest hedge fund in the world. He is a force to be reckoned with in the financial market and so, his words can act as a form of validation for bitcoin and other cryptocurrencies. Dalio is one of those persons that were pessimistic about bitcoin at first. But he feels that bitcoin has proved itself with time.
During the recent CoinDesk consensus conference, the hedge fund manager declared that he has some bitcoin in his portfolio. He went further to state that he rather invests in bitcoin than government bonds. He fears that bitcoin will be so successful in the future that the government might end up coming for it.
Such a statement from a man who once doubted the possibility of bitcoin lasting long will send a lot of positivity around his followers and many others who are scared of the cryptocurrency market. Ray Dialo has been a successful hedge fund manager over the years and he’s very careful of where he puts his money and so people will assume that “If Dalio could trust bitcoin, who am I not to trust it?”
7. Elon Musk held a meeting with Miners.
On the 24th of May, Elon Musk tweeted that he heard meetings with miners based in North America. Before now, he has given reasons why his company will no longer be using bitcoin as a form of payment. He stated in his tweet that it is promising to know that the miners are committed to publishing current and planned renewable usage. Before the tweet Bitcoin was trading at $38,000 and surged to $39,500 after the tweet. This tweet was a big deal most especially for persons that care so much about the environment. The meeting with the miners gave birth to the Bitcoin mining council to help encourage sustainability as they talked about the environmental impact of Bitcoin.
8. Iran Bans crypto mining for four months.
Iran is the recent country that has joined other countries like China to ban Crypto mining only that they are more particular about it especially with the time duration. Major cities in Iran have been suffering from power blackout and the officials are blaming it on the mining of bitcoin which consumes a lot of energy. In terms of ranking of countries that consume the most energy for the mining of bitcoin Iran comes sixth and accounts for 3.82% of the total bitcoin mining according to the University of Cambridge.
Early in the year, authorities blamed blackout and air pollution on bitcoin mining. They recently decided to ban Crypto mining and it was announced by the president on state TV. The ban will commence with immediate effect from May 26th to the 22nd of September.
9. Polygon breaks into the top 20 Cryptocurrency List.
Although this is not the kind of news that shakes the general cryptocurrency market, it is the type that will have a great effect on the particular coin as well as draws attention from investors to the cryptocurrency market. Polygon formerly known as MATIC is a well-structured and easy-to-use platform that is used for Ethereum scaling and infrastructure development. Mark Cuban, the billionaire who owns the NBA’s Dallas Mavericks recently invested in the project. He is one of those huge personally that were against cryptocurrencies but has become a strong advocate for the market. His reasons for investing in polygon were that it works well, it’s fast, and the user base of the coin keeps growing.
Such affirmation from a personality like Mark Cuban is good not just for the polygon coin but also for the rest of the cryptocurrency market. A lot of persons are changing their opinion about the cryptocurrency market and taking further steps in investing in projects they believe in.
The polygon coin as of January this year had a market cap of $200 million but recently broke into the top 20 coins with a market cap of $13 billion. The coin currently sits as the 14th most popular cryptocurrency on Coinmarketcap.
As far as the market exists, major news that will affect the market both positively and negatively will always be released. This is what is called fundamental analysis. To survive the storms when news that can negatively affect the market is released, investors need to risk only what they are ready to forfeit so that they will be less emotional about the market. This is because the cryptocurrency market is very volatility which makes it risky