Top 5 Lessons We Can Learn from the Worst Week in Cryptocurrency

It’s been a bad week, but there’s no need to lose faith

Top 5 Lessons We Can Learn from the Worst Week in Cryptocurrency

The past week has been a roller coaster ride for the cryptocurrency industry.

On May 13, Tesla founder Elon Musk tweeted, “Tesla is suspending Bitcoin payments due to concerns about Bitcoin’s impact on the environment. Cryptocurrency is a great idea and we believe it has a bright future, but that can’t come at the cost of huge environmental costs. Tesla will not sell BTC and we will continue to use it for transactions once it transitions to sustainable energy for its mining methods, and are also currently considering using cryptocurrencies with lower energy consumption (<1% of Bitcoin’s energy consumption).”

On May 18, the China Internet Finance Association, the China Banking Association, and the China Payment and Clearing Association issued an announcement on preventing the risk of speculation in virtual currency transactions.

On May 22, Liu He presided over the 51st meeting of the State Council Financial Stability Development Committee, which called for a crackdown on bitcoin mining and trading practices and resolutely prevented the transmission of individual risks to the social sector.

The result was obvious, as Bitcoin, which is exceptionally sensitive to policy changes, quickly reacted and its price soon plummeted – according to Coingecko data, at the time of this writing Bitcoin had already dropped to below $35,000, down 25.6% in a single week, and its market cap shrunk to around $640 billion.

Many people wonder how the cryptocurrency market could have done this. First of all, let’s be clear: Bitcoin won’t go up forever, and it took a series of events stacked on top of each other, starting with Elon Musk’s comical comments to excessive leveraged trading, to cause the heavy price drop. What’s important for us to understand is what lessons can be learned from this plunge.

  1. Cryptocurrencies remain extremely volatile
    Since the birth of Bitcoin, the cryptocurrency market has been prone to sudden price spikes followed by rapid plunges. 2013 saw a plunge after Bitcoin’s price first reached $1,000; early 2018 saw the cryptocurrency industry enter a long bear market after the initial token offering bubble burst; March 12, 2020 “Black Thursday “, the price of bitcoin fell again from its highs to $3,000. While this week’s cryptocurrency market crash was not as severe as last March during the pandemic, there is no doubt that a 40% plunge is still somewhat “embarrassing. So, the first lesson we need to learn is that volatility is part of cryptocurrency, so get used to it.
  2. Many in the mainstream media are still hostile to cryptocurrencies
    For years, the mainstream media has been “not too fond” of bitcoin and has often ridiculed the crypto community. Last week, a number of mainstream media outlets wrote articles attacking bitcoin, including an article by New York Times columnist Paul Krugman calling it worthless, a Wall Street Journal financial writer Greg Ip comparing bitcoin to “fentanyl,” and an article by the venerable political magazine The New Republic, a long-standing political magazine, said that Elon Musk’s “betrayal” would cause the cryptocurrency market to sink, and it was these media reports that further increased fear in the already nervous crypto market.
  3. Bitcoin still has a reputation problem
    From cyber attacks to ransomware, many criminals prefer to use bitcoin as a means of payment. At the same time, more and more people are discovering that bitcoin mining can cause environmental damage. While these statements seem to be amplified, it is undeniable that even though it has been 12 years since Bitcoin was created, it still has a reputation problem. Partly due to the ignorance and entrenched “stubbornness” of most people, and partly due to the crypto community’s own problems, so far there has not been an “ambassador” in the cryptocurrency space who has a good reputation and image and has helped the industry to Maturity.
  4. Coinbase has let everyone down
    At a time when the cryptocurrency market has been hit hard, Coinbase has gone down. Although Coinbase later said that it had found out the reason why users encountered problems in logging in, checking balances and trading and that the funds were safe, the system crash would certainly affect users’ confidence and there was no need to find any excuse or reason for the technical failure. On the other hand, since landing on Nasdaq, Coinbase’s share price has been underperforming, and if calculated according to the closing price of $224.35 last Friday (May 21), the current share price has fallen 36% compared to the time of listing.
  5. Cryptocurrency fundamentals remain solid
    The past week has been tough indeed, but unlike the previous “false boom” in the cryptocurrency market, many crypto projects are now actively building infrastructure, with crypto protocols such as Dfinity and Uniswap making huge leaps forward. It’s safe to say that “crypto” is no longer an abstract bet on the future, but an innovative technology that can actually be applied in reality, that is real, and that is more exciting than ever.

In 2018, MIT professor Gary Gensler asked his students in class, “How many of you own Bitcoin?” It turned out that many answered that they held bitcoins. Today, students graduating from one of America’s most prestigious universities are moving into the wider world of finance, and the professor, Gary Gensler, has become the chairman of the U.S. Securities and Exchange Commission.

Looking back, you realize we’ve actually come a long way. So, although it’s been a miserable week, there’s no need to lose faith, but rather to go on with more determination.

Posted by:CoinYuppie,Reprinted with attribution to:
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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