Bitcoin plummets
Elon Musk's SNL performance hurt cryptocurrencies
Elon Musk boosted bitcoin and then crashed it
Another blow: China says no to cryptocurrencies
How much is a bitcoin worth?
Origins of bitcoin
Arguments in favour of cryptocurrencies
Governments and institutions mistrust bitcoin
The cryptocurrency bubble
Doubts about the future of bitcoin
Risks for small, inexperienced investors
Investment is always a gamble
Pros and cons for cryptocurrencies after the pandemic
Contra: Post-pandemic economic recovery must come first
Pro: National currencies are unreliable
Roller coaster
What will happen tomorrow with bitcoin?
Bitcoin takes a dive: The end of cryptocurrencies?
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Bitcoin plummets

After a cycle of boom and a significant rise in its price, bitcoin has fallen and seems to have entered an unstoppable phase of decline. On Wednesday, May 19, it dropped 40% below its historical maximum. What are the reasons for this dive? Is it a passing event or does it mean the end of cryptocurrencies?

(Image: André François McKenzie / Unsplash)

Bitcoin takes a dive: The end of cryptocurrencies?
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Elon Musk's SNL performance hurt cryptocurrencies

Some analysts believe that Tesla founder Elon Musk, a world famous billionaire, doomed cryptocurrencies when he appeared on the comedy show 'Saturday Night Live' on May 16. He mocked cryptocurrencies and called them a "scam."

Bitcoin takes a dive: The end of cryptocurrencies?
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Elon Musk boosted bitcoin and then crashed it

Curiously, it was also Elon Musk who had helped raise bitcoin to the highest level. He had openly invested in this currency and announced that his electric car brand would allow purchases in cryptocurrencies. However, once the company had collected its investments and reached the required liquidity, it reversed its support for bitcoin. Now, Tesla no longer accepts that currency.

Bitcoin takes a dive: The end of cryptocurrencies?
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Another blow: China says no to cryptocurrencies

While Elon Musk struck the cryptomarket from the capitalist side, China has attacked the alternative coins from a communist perspective. The country's prohibition of transactions with cryptocurrencies has added to a perfect storm for the market.

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How much is a bitcoin worth?

Bitcoin has gone from trading at more than $ 64,000 to below $ 37,000. However, the number changes quickly. Whoever wants to know the exact price of bitcoin should look at the market rates in real time. It's a turbulent period, and cryptocurrencies are going up and down quickly. The question is: will bitcoin continue to fall or will it rise again?

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Origins of bitcoin

Bitcoin was created in 2008 by a person or collective known by the pseudonym of Satoshi Nakamoto. No one knows with certainty who are behind this entity. After bitcoin, many other cryptocurrencies emerged. These digital currencies were developed and circulated with private investments rather than the backing of a bank. This means that there's no national bank (necessary) to guarantee the value of bitcoin, as is the case with the dollar or euro, for example.

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Arguments in favour of cryptocurrencies

Investors and analysts differ in opinion about the benefits of cryptocurrencies. Some favour a prosperous future for them, because the digital coins would support a new world order that doesn't depend on big banks or governments. Successful trades in cryptocurrencies would demonstrate how there is a genuinely digital economy that can dispense with traditional mechanisms.

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Governments and institutions mistrust bitcoin

More traditional parties in the financial market see two problems with bitcoin. First, there's the economic problem of its volatility. Second, there's the political issue of governments losing all control over transactions made with the currency. It has no connection to central banks or known institutions, its behaviour and influence on local economies is uncontrollable, and its financial transactions (involving crime or corruption) are untraceable.

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The cryptocurrency bubble

The European Central Bank has warned that massive investment in cryptocurrencies can create a bubble that will cause massive economic losses when it bursts.

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Bitcoin takes a dive: The end of cryptocurrencies?
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Doubts about the future of bitcoin

Some analysts believe that a drop below $ 40,000 in the price of bitcoin (which has already occurred) calls into question the viability of the project.

(Image: Nick Chong / Unsplash)

Bitcoin takes a dive: The end of cryptocurrencies?
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Risks for small, inexperienced investors

Cryptocurrencies have large investors who can afford to lose their investments, but there's also an infinity of small investors who embark on an adventure in a territory that is still quite unknown. For them a plunge in bitcoin prices can be desastrous.

(Image: Adeolu Eletu / Unsplash)

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Investment is always a gamble

However, proponents of the new currencies say, all investment products carry a certain risk. None of them is absolutely risk-free, so whoever gambles with their money can expect both profits and losses.

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Pros and cons for cryptocurrencies after the pandemic

In turbulent times like the ones we live in, arguments for and against cryptocurrencies are becoming more polarized. Companies and governments point at the economic turmoil caused by the pandemic and push for reliance on stable institutions with long traditions of regulation and economic exchange.

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Contra: Post-pandemic economic recovery must come first

Perhaps, they say, when after the pandemic there is a economic recovery and greater stability, the definitive expansion of cryptocurrencies can take place.

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Pro: National currencies are unreliable

Other investors, however, say that traditional currencies - especially the ones in countries with a lot of inflation like Turkey, Argentina, or Venezuela - can no longer be trusted and that cryptocurrencies will eventually become the more stable option.

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Roller coaster

For now, all groups in this discussion must admit that investing in cryptocurrencies is like riding a roller coaster. There has been a spectacular rise and now it is falling sharply. Is there another dizzying rise in sight?

Image: Anne Nygård / Unsplash

Bitcoin takes a dive: The end of cryptocurrencies?
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What will happen tomorrow with bitcoin?

We will have to wait and see what the real future of cryptocurrencies is. In economics, what is a catastrophe one day can become an opportunity the next day. We will find out - either as spectators or as winners / losers of the crypto trade.

(Image: Executium / Unsplash)

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