For the past two weeks, bitcoin sank over 50% along with most other altcoins off lots of different news. The catalyst of most of the bearish moves happened when China announced their banning of crypto mining. CEO and founder of Tesla, Elon Musk, always steps in and talks about crypto as well. Although he is most certainly a crypto bull, he knows the process of mining bitcoin uses so much energy and is not good for the environment. It would be against his motives for an electric vehicle company to use bitcoin as one of their methods of transactions as long as mining bitcoin consumes tremendous amounts of energy. These two events helped stir fears in bitcoin's future, but there is a lot more going on in the decentralized market that's hurting crypto for the time being, but there is also several bullish ways to think about this situation.
Why crypto keeps tanking
China's ban of crypto is still relatively recent news, and the fact that somewhere around 70% of mining happens there is not a good sign. This week, we saw more news from Ethereum co-founder, Vitalik Buterin, seemingly becoming increasingly bearish in his own industry, calling the market overextended and ready for a correction. He was right, as bitcoin and many other coins fell to multi-month lows. He also took shots at dogecoin saying that doge has no user utility which contributed to the meme coin's downtrend since early May. On top of all this, today is the day where $2.2 billion worth of bitcoin options contracts will expire; it's similar to a triple-witching move in stocks where stock prices dip on expiration of contracts.
Elon Musk and CEO of Marathon Digital Holdings (MARA), Fred Thiel, talked about making mining more carbon neutral in a call two days ago. The basic idea to gain from the call was that Thiel had to explain that the crypto mining industry is not consuming as much energy as he thinks. His argument used the amount of energy consumed in the US compared to the mere 500 Mega Watts of power used in a year in mining versus 200 Giga Watts of power lost among transmission lines in the US. That's 200 Giga Watts not even being used, and there is hardly a concern because it is not discussed as much as bitcoin mining. So, there is a huge difference in power consumption between overall power consumed and the mining industry overall.
Thiel also talked about how their company and the industry is working toward eventually hitting 100% carbon neutrality in crypto mining in which Musk would have no objections to the mining industry.
Musk also is continuing his talks with Dogecoin developers to help decrease block time along with lowering transaction fees. Although many people could argue that Musk's tweets really have no impact on altcoins overall, we've seen his tweets on Doge alone bring the crypto market up billions of dollars, so we will keep monitoring his status on dogecoin and what he plans to do with the ironic crypto coin.
I think most of the bearish news is behind us now, and talks of improving crypto and mining are happening as we speak. I am not to say that bitcoin and the rest of the market will now go up from here, but I do think that this is the time to start considering being bullish. The options expiration today was not really any bad news, but more of a technical event that happens every so often. This recent dump in prices could mark the right time for crypto bulls to start investing. This might be the time we see what crypto is all about.
As of now, I own positions in bitcoin, ethereum and doge.
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