Sometimes, investors tend to overvalue the price of Bitcoin. Generally, any drop in the price of an asset is characterized as a correction when prices fall more than 10% from a recent peak over several days. After the World Health Organization declared the Coronavirus as a global pandemic, the value of Bitcoin plummeted by 40%, from $7,969.90 to $4,776.59. One of the most recent examples of a crash is what we call the “Black Thursday” crash of March 12, 2020. During this time, Bitcoin prices sank over 73.1% within 24 hours, from a high of $ 259.34 to nearly $70. Financial Crimes Enforcement Network (FinCEN) pulled the shutters on the Bitfloor crypto exchange and announced that Crypto exchanges are required to register themselves as a “money transmitter”. The crash that took place on April 10, 2013, is the most significant crash by far. While technical factors like demand play a vital role in Bitcoin’s price, other fundamental factors such as macroeconomic events, sudden implementation of regulatory changes or significant company announcements could cause a large crash in the market. For example, when Elon Musk tweeted about the sustenance of Bitcoin environmentally. Crashes are often triggered by impactful and sudden moves in the cryptocurrency market that could cause panic among the investors who exit the market en masse. In traditional finance, an asset is crashing if its price drops by over 10% within a single day. Although the decline narrowed below 10% on the same day, Bitcoin’s market value dropped nearly $70 billion within a day. The price of Bitcoin reduced by 30% at one point when the China Banking Association issued a warning to its member banks of the risks associated with digital currencies. It has been a bleak couple of months for the infamously volatile digital currency. The currency grew a staggering 600% in six months and was valued at nearly $2 trillion at that time. The entire crypto market, including the largest cryptocurrency ‘Bitcoin’, witnessed phenomenal growth between December 2020 and April 2021. More often than not, investors mistake a crash for a correction despite the two terms carrying different meanings altogether. When the price of this digital currency declines, it is not uncommon for people to use words like “crash” and “correction” interchangeably. Yet, it has had its fair share of crashes and corrections in the market. CoinSwitch Kuber saw nearly 6 million Indians onboard the platform.
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