The Bitcoin blockchain was created to help individuals reclaim their financial freedom, privacy, and security. As a result, many investors don't want the cryptocurrency market to collapse. After all, it has the potential to make ordinary people wealthy and democratize currency markets. Ultimately, everyone strives for a certain level of financial freedom, and Bitcoin offers that freedom for everyone. Historically, banks and governments have exercised tight control over these financial factors.
Elon Musk's statement about accepting Bitcoin
Elon Musk has reportedly tweeted about accepting Bitcoin for payments at Tesla. The company had been accepting the digital currency in the United States and was looking into expanding that service to other countries. However, in late May, Musk reneged on his pledge to accept Bitcoin, citing climate change as the main reason.
The statement came on the same day that former President Donald Trump called Bitcoin "a scam." As a result, the cryptocurrency sold off - Bitcoin fell below $30,000, and Ethereum and dogecoin plunged a combined 12.6 percent to $0.324 - in one day. Elon Musk is a major proponent of cryptocurrencies and has several different coins in his portfolio. He is the owner of Tesla and SpaceX bitcoins, as well as ether and dogecoin.
Cryptocurrency's volatility
Although Bitcoin is a relatively new asset class, it is considered to be more volatile than traditional stocks. This volatility may become less of an issue in the future as higher trading volumes increase. But it is important to keep in mind that the volatility of cryptocurrencies may converge with the volatility of energy over time.
The volatility of the crypto market has persisted since late last year. As a result, the total market capitalization of the digital asset industry has declined by over 65% since November 2021. However, the volatility in cryptocurrencies can still be beneficial for investors. Even 10% daily swings can make trading profitable.
Regulation
Regulation of Bitcoin and other crypto-currencies is a complex issue. The nature of these digital assets makes them unique and uncharted territory for governments, financial regulators, and other institutions. Because they have no central issuing authority, they are agile in performing operations, and they are issued in units of value in a mathematical form. These features have made them popular and widely used, but they are still unregulated, causing many to question the regulatory status of these assets.
To establish the legality of Bitcoin and other digital currencies, governments, financial regulators, and law enforcement agencies must come together to agree on regulations. Those who oppose regulation view it as a bureaucratic mechanism that hampers development of digital currencies. But it is crucial to understand that regulations aim to foster mutual trust among parties by providing third-party guaranties. The Bitcoin system, by contrast, does not require a third-party guarantor.
Price stability
The price stability of Bitcoin has been in question following the hack of Mt. Gox, a cryptocurrency exchange in Japan. The hack led to the loss of around 850,000 Bitcoins. The trustee of the exchange has announced plans to make the repayments. The plan is expected to be completed in 2021 and it is anticipated that it will push the selling price of Bitcoin even higher.
Bitcoin's price has remained relatively stable since the start of the year. However, the price of the digital currency has dropped from around $67,000 to $46,000 in December. The price fell again on Wednesday and went down by around five percent in a matter of hours. The price then fell through the $42,000 mark.
Legal tender status
A few years ago, El Salvador became the first country to recognize Bitcoin as legal tender. It has since experienced a roller-coaster price cycle, reaching highs of $69,000 in November and a low of $40,000. This recent adoption of cryptocurrency by El Salvador has raised concerns about its legitimacy, as many speculate that the country's investment in Bitcoin may be driving the country to bankruptcy.
The IMF and other governments have come out in favor of recognizing Bitcoin as legal tender, but there are many issues surrounding its adoption. For instance, there are legal, financial, and macroeconomic concerns related to the issuance and use of cryptocurrencies.