What’s Behind Crypto’s Latest Plummet?

Highlights

• Sell offs often occur when Bitcoin reaches a particular high, which it did recently when it reached an all-time high of US$66,500

• According to the study, the top 10,000 individual investors in Bitcoin control about one-third of the cryptocurrency in circulation

• The success of the dog-based coins – including the likes of Shiba Inu and Dogecoin - sometimes signals a downturn for the wider crypto market

Several cryptocurrencies lost value on Wednesday after drop of Bitcoin’s price, which saw it fall below US$60,000 after hitting an all-time high last week.

While losses across cryptocurrencies are largely affected by bitcoin selloffs, one coin which has bucked the trend is memecoin, Shiba Inu (SHIBA) which continues to make huge gains adding to a massively successful 2021.

The forces behind the cryptocurrency market are difficult to define, but similar factors most likely cause the various corrections throughout its history – and this latest correction is probably no different.

These Market Corrections Are Nothing New

Major corrections or even minor corrections are nothing new in the cryptocurrency market. In fact, the very nature of cryptocurrency is that it’s volatile. It’s volatility is one of its most prominent features and one of the main reasons it attracts investors looking to make big gains in a short time. But, of course, the other side of that coin is the very real possibility that those investors can potentially lose large amounts of money in just as short amount of time.

Bitcoin’s journey over 2021 demonstrates the market’s volatility fairly emphatically. After a steady rise in the early months of the year, the worlds largest cryptocurrency grew to around US$64,000 in mid-April. Of course, even along that journey they were rises and drops of up to US$10,000.

And then there was the mass sell-off during May, June, and July, which saw many cryptocurrencies, including Bitcoin, lose more than half their value.

Since then, the crypto market has made a steady resurgence with Bitcoin, once again, leading the pack. In fact, on October 21 Bitcoin hit a new all-time high of US$66,500. Since then, it has fallen to around US$59,000. So as you can see, corrections in the market and nothing new. This isn’t the first and it certainly won’t be the last.

So What’s The Reason For The Latest Crash? 

Blockchain data suggests that the latest drop in digital currencies across the market might have been due to large sell-offs. This is often the case when Bitcoin reaches a particular high. So with Bitcoin reaching an all-time high of US$66,500 just eight days ago, the time was right for a sell off.

This theory makes even more sense when you consider the latest research from the National Bureau of Economic Research, which revealed that only a small amount of people owns a large portion of bitcoin.

According to the study, the top 10,000 individual investors in Bitcoin control about one-third of the cryptocurrency in circulation.

Therefore, taking that stat into account, it only takes a small number of individuals to sell off their Bitcoin for a large amount of its value to be lost.

Source: © Igorigorevich | Megapixl.com

So Why Is SHIBA Thriving Then? 

While the defiance of the dog- themed memecoin may seem to be an anomaly in an otherwise downward-headed market, analysts have suggested the success of the dog-based coins – including the likes of Shiba Inu and Dogecoin - sometimes signals a downturn for the wider crypto market.

This would make sense considering SHIBA has increased over 40 percent in the past 24 hours and 162 percent in the past seven days.

How Low Will It Go? 

It’s impossible to pinpoint a specific price where Bitcoin will drop to, suffice to say, it will go down until people are content with a price where they can start buying again.

Given the revelation of just how few people own large amounts of Bitcoin’s total value, it would seem it won’t take many of those very people to start buying before its price rises once again.