Despite cryptocurrency’s promising aspect of decentralization, it also features a risk in its extreme volatility. Crypto as a legitimate currency is truly possible, however, its volatility sometimes affects its credibility. Gemini says that ‘news developments and speculation are responsible for fueling price swings in crypto markets.’ This finding is evident in the probable reasons for the 2018 crypto crash.

In 2018, the cryptocurrency ‘bubble’ popped, decreasing its overall price to over 80% with Bitcoin’s (BTC) price dropping from around $6,000 to $3,000-$4,000. Fast Company reports that there are two main likely reasons for this crypto crash – a lack of institutional support and internal battles within the blockchain community. Due to investor criticism and a ‘civil’ war, the first cryptocurrency’s price was on a supposed rise till it came crashing down.

Since the bubble popped in 2018, crypto has been growing and has gained more recognition by financial institutions and major businesses. The price of BTC grew at an estimate of 1375% from $4000 to $55,000. While there has been certain development in its adoption, there are still evident criticisms towards it regarding its volatility, among other things, and even environmental damage.

Currently on a bull market run, cryptocurrency took a somewhat unforeseen turn when a small crash happened during mid-April of 2021. Dubbed as a flash crash, Bitcoin dropped to almost 15% from around $60,000 to $54,000. Moreover, a new record in liquidations was done amounting to around 8 billion USD based on a Bybt research. 

According to Yahoo! Finance, there are likely two reasons for the drop – the U.S. treasury’s rumoured plans on tackling money laundering and a Chinese mining hub blackout. In a currently unavailable tweet by FXHedge, it said – “U.S. TREASURY TO CHARGE SEVERAL FINANCIAL INSTITUTIONS FOR MONEY LAUNDERING USING CRYPTOCURRENCIES -SOURCES.” 

The U.S. Treasury has actually done relevant charges such as a past incident with Chinese investors accused of laundering stolen crypto for Lazarus, a North Korean hacking group. The Daily Hodl reports that the crypto markets dropped moments after this hearsay. Not only BTC was affected by the tweet but other cryptocurrencies as well. Ethereum (ETH) fell down by 17% from around $2,500 and LiteCoin (LTC) dropped around 24% from around $275.

Ironically, this crash happened a few days after a milestone for the community following the listing of Coinbase, a crypto trading platform, on the Nasdaq. This marks the first time a crypto firm has been listed on the American premier stock exchange. While the mainstream adoption of crypto positively affects its price, it won’t fully stop a market crash from happening as seen in this recent dropping event. 

Moreover, like any currency, a price drop can happen because of technological and technical difficulties. The recent blackouts in the Chinese region of Xinjiang may be a factor to this recent crypto flash crash. Due to this, Forbes reports that 50% of Bitcoin’s hash rate was lost. Affecting the 215 exahash per second to about 120, the blackouts were caused by a coal mine explosion on April 10. Willy Woo, crypto researcher states – “Price and hash rate [have] always been correlated.”