The landscape in the cryptocurrency market after the May crash

13.08.2021 12:14|Conotoxia Ltd Analyst Team

Falling cryptocurrency prices in May reminded speculators that no bull market lasts forever and that unexpected and violent corrections can occur in the market. But how has the market changed since then and what did the May crash lead to?

The price of bitcoin fell from its peak at 64 thousand USD to 29 thousand USD, while the price of ETH plunged from over 4 thousand USD to about 1.7 thousand USD. The entire value of the cryptocurrency market fell from over $2 trillion to $1.1 trillion at one point. Somewhat along the way, there was the topic of China, which expelled cryptocurrency miners from its country, which lowered the computing power of the network, but also affected the difficulty of mining, El Salvador, in turn, passed a law introducing bitcoin as legal tender, in order to somehow free itself from the massively "printed" U.S. dollar and reduce fees for sending money. Elon Musk has announced that he personally, as well as the company SpaceX own bitcoins.

There have been many events since May, but it seems that the most interesting is what happened to the users of cryptocurrencies, because this phenomenon can only be compared to the March crash on stock exchanges, after which the number of individual investors began to grow rapidly. At first glance, the massive crash and the uncertainty of the economy, the job market, wages, could deter from the risks associated with investing in the stock market, and this is where people seemed to look for opportunities with falling stocks.

Cryptocurrency users seem to have taken a similar approach, seeing discounts of a few tens of percent and concluding that this might be a good opportunity to get into the market. According to the report of crypto.com exchange, which is one of the largest in the world, in January 2021 the crypto market had about 100 million users. However, barely six months later, in June 2021, the number of users was already expected to be 221 million, more than doubling. According to the report, 142 million people in the world were dealing with cryptocurrencies in April, and in May it was already 203 million people. This could mean the largest monthly increase in cryptocurrency users in history.

So, since Covid hit the markets, it seems that all kinds of crashes, instead of deterring, actually attract new people who can treat price cuts in the markets like sales in stores, where you can get the same product at a good promotion.

Currently, the mood on the BTC or ETH markets seems to be improving, and the bears are systematically forced to abandon their positions and buy back what they have sold, hoping for another wave of declines. BTC/USD is back above $46,000, while ETH/USD has already reached $3,200.


Daniel Kostecki, Chief Analyst Conotoxia Ltd.

Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.

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72.43% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 72.43% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
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