Bitcoin and other major cryptocurrencies have recovered somewhat after the price slump on February 21. Now the question arises as to the reasons for the crash.
A bull market that had been going on for months was abruptly interrupted by a price slump on the night of February 21-22. Initially, some observers assumed that it was a „flash crash“. A flash crash is the term used to describe price drops on the stock markets that last only minutes and are then immediately followed by a strong recovery.
Contrary to what was assumed, the Bitcoin (BTC) price did not recover for the time being. Rather, the price continued to fall, as did the prices of many other major cryptocurrencies. Bitcoin fell from its high of over USD 58,000 to USD 51,000 in just hours. Within a further 24 hours, the price then plummeted to just over USD 46,000.
Is the Tesla boss to blame for the Bitcoin price slump?
Some observers consider a tweet from Elon Musk to be the trigger for the crash. Musk had tweeted on February 21 :
(…) BTC [Bitcoin] & ETH [Ethereum] seem to stand tall lol.
One could understand this sentence to mean that Musk regards the prices of Bitcoin and Ethereum as excessive and thus unspokenly assumes a correction. That may have scared the many fans of Musk who hold Bitcoin.
It is true that Musk’s tweets have often had an unexpectedly large impact, for example in the case of Dogecoin. On the other hand, there is almost a whole day between the aforementioned tweet and the price collapse of the crypto market. This thesis therefore seems rather daring and not very plausible.
Price setback on the Bitcoin market?
It is more likely that it was actually a simple price setback. These are quite common in highly heated markets, as traders want to take profits, for example.
One shouldn’t forget that the Bitcoin market has traditionally been very volatile. Exchange rate fluctuations of 20 percent are not uncommon. Due to the long, unchecked price upswing, many investors have apparently suppressed this fact.
In addition, despite everything, the crypto market is still rather small and can be influenced by “ whales ”, i.e. large investors. Large investors can deliberately cause prices to fall in order to frighten and “shake out” small investors. Inexperienced investors often sell on unexpected drops. The big players can then buy these Bitcoin coming onto the market relatively cheaply.
It should be noted, however, that the generally good mood on the crypto market has not evaporated due to the price slump.