Why has the cryptocurrency market crashed so much after all the hype last week?

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Cryptocurrency. Bitcoin. Dogecoin. Elon Musk. You either love it or you hate it, but Cryptocurrency is here for the long haul even after it crashed dramatically over the weekend. 

Why has the cryptocurrency market crashed so much after all the hype last week? 1
Bitcoin

It appears that the price of bitcoin, in particular, plunged dramatically over the weekend as talks of a ‘hard clampdown’ on money laundering sparked a sell-off craze amongst investors. 

The weekend’s ‘crypto carnage’ seems to be connected to seemingly ‘unconfirmed reports’ that the US Treasury would issue a major crackdown on apparent ‘money laundering carried out through digital currencies’. 

Additionally, the data website CoinMarketCap cited that an apparent ‘blackout’ in China’s Xinjiang region was perhaps subject to the dramatic drop. The Xinjiang region allegedly powers much of Bitcoin mining, which is the process by which new bitcoins are entered into rotation.

On Sunday, in the steepest slide the market has seen in months, cryptocurrencies were hammered by a so-called ‘flash crash’ over the weekend that saw the price of bitcoin fall from approximately $US59,000 ($A762,90) to $US51,000 ($A67,238) before bouncing back. It was the most precipitous fall in the price of bitcoin since February this year. 

This all happened only a few days after the world’s superior digital coin scored a new high of more than $US64,000 ($A82,755) on Wednesday last week. 

The peak in the price of Bitcoin came amid much enthusiasm for the hotly anticipated appearance of digital currency exchange Coinbase on Wall Street. 

Why has the cryptocurrency market crashed so much after all the hype last week? 2

Despite the weekend’s crazy dive and resurfacing, Bitcoin is nevertheless still up an enormous 89 per cent in 2021!  

This dramatic improvement on last years value comes as it continues to earn mainstream recognition as a real ‘store of value’ and a trusted method for payment, with PayPal and MasterCard jumping on board. 

Many investors are predicting that Bitcoin will hit $100k earlier than previously expected, maybe by the middle of the year! It seems that the time to buy Bitcoin is running out. 

XRP and Ethereum also fell over the weekend, with the price of the second-largest virtual currency dropping a whopping 18 per cent, before slightly recuperating. 

Why has the cryptocurrency market crashed so much after all the hype last week? 3

Lastly, we couldn’t forget about Dogecoin! The coin which began as a huge joke by Elon Musk actually held steady amongst the other weekend losses in the crypto market. Maybe Mr Musk saved it!

Why has the cryptocurrency market crashed so much after all the hype last week? 4

Jokes aside, last week Dogecoin scored a new high too, with its price soaring by 400 per cent in just seven days!