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VERIFY: What's going on with Bitcoin? Why are there such ups and downs with cryptocurrency?

The Verify team spoke with cryptocurrency experts about the recent drop in prices, as Bitcoin fell from as high as $60,000 per coin to as low as $30,000 each.

WASHINGTON — Owners of cryptocurrency like Bitcoin have been on a rollercoaster over the last couple of months. After spiking to as high as $60,000 per coin, Bitcoin saw its prices drop to as low as $30,000 per coin in mid-May. Similar drops happened with other cryptocurrencies, like Ethereum and Dogecoin.

The prices have since recovered slightly, but it has triggered a lot of questions online about how these major ups and downs are possible. The Verify team spoke with the experts to find out. 


Why did cryptocurrency, such as Bitcoin, drop so suddenly on Wednesday, May 19?


  • James Angel, Associate Professor at Georgetown University's McDonough School of Business, specializing in market structure and regulation of global financial markets
  • Will Cong, Associate Professor at Cornell's SC Johnson College of Business; Faculty Director of the FinTech at Cornell Initiative


Our experts said that the volatility of cryptocurrency like Bitcoin was on full display, as the market sentiment shifted rapidly, possibly due to news out of China of increased regulation and a Tweet from an influential tech leader. 


Pinpointing the exact cause of market fluctuations is difficult. Nonetheless, our cryptocurrency experts said that this shows how rapidly prices can fluctuate with a speculative market like Bitcoin. 

"Part of it is just the madness of crowds," Angel said. 

Our experts said that unlike a company stock, where you can 'look under the hood,' to examine profits and losses, many investors are left speculating when it comes to cryptocurrency. 

"The price of bitcoin is really a speculation," Angel said. "On what other people are willing to pay for it at some point in the future." 

In this atmosphere of speculation, 'market sentiment' can sometimes take over, according to Cong, 

"It's very much self-fulfilling," he said. "At least over the short-term. If everyone believes Bitcoin is worth nothing, and they take action, selling Bitcoins, the price could drop to zero." 

As for what triggered the huge shift in cryptocurrency prices, our experts said they could only hypothesize. One factor was the announcement out of China that they were increasing certain regulations on cryptocurrency. 

Then there was the May 12 tweet from Elon Musk, the CEO of Tesla. He announced that the company would no longer be accepting Bitcoin as payment, due to environmental concerns. 

Cong pointed out that the environmental concerns were there before the tweet and were well known, but the words of an influential person like Musk can sometimes move the market.

"Nothing fundamental has changed in that aspect," he said. "But when he tweeted about that - many others believe he's the guru - he's a knowledgeable person - they develop new perspectives about this cryptocurrency even though nothing fundamental has changed."

While scary for investors, Angel said that this type of rise and fall is not surprising for a speculative market like this. 

"That's human nature," he said. "We've seen it in speculative markets for hundreds of years. And we will see it in speculative markets going into the future. It's a wild ride. So buckle up your seat belt. And if you don't enjoy the roller coaster, don't play it." 

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