Cryptocurrencies are looked at as profitable instruments to park funds. Much to the likes of numerous investors, Elon Musk made a public announcement in the month of March, stating that Tesla would now start accepting bitcoins as a mode of payment on the purchase of its cars. This boosted the confidence of numerous retail and institutional investors leading to an influx of funds into the cryptocurrency market.
This statement was announced after Tesla had made a purchase of US $ 1.5 billion worth of bitcoins.
These developments led to a positive increase in the value of a Bitcoin to a whooping amount of $ 64000 in the month of April in comparison to December 2021, where it was still trading at $ 30,000.
Are Cryptocurrencies Still The Future ?
However, much to the dismay of several investors, Elon Musk stated that Tesla would no longer accept bitcoins as a mode of payment for its cars. He expressed his concern for the environment stating that mining of bitcoins used up fossil fuels which gave out the worst emissions. This caused a major sell off to happen on 12th May which lead to a fall of 15% in the cryptocurrency market.
The value of cryptocurrencies fell even further on 18th May, when the Chinese government stated that financial institutions should refrain from providing services with cryptocurrencies as these instruments are highly volatile.
This caused an even further sell off leading to a 30% decline in the value of a bitcoin in one single day. Cryptocurrencies lost anywhere between 7-22 % of their value and the shares of Coinbase dropped by 5.4%.
The prices of some of these currencies currently stands at :
As the range of volatility in the cryptocurrency market is relatively high, it becomes near impossible to predict the future of these currencies.
This article is authored by Medha Rijal. She is an active blogger and writes about topics such as financial planning, investments and wealth management.
To get a basic understanding of cryptocurrencies, you should also give this article – The Future Of Cryptocurrencies a read.