On Wednesday, the BTC price crashed to $30,000 dollars, which is its lowest level since January. The price of bitcoin started spiralling downwards after Elon Musk said Tesla will no longer accept cryptocurrency due to concerns about the use of fossil fuels. However, it did recover strongly after hitting lows and therefore preserving its gains after the sharpest recovery in its history. This Dip may have just been what Bitcoin needed says Crypto Lenders.
The COVID-19 pandemic and latest bitcoin bull run have provided a handful of stress tests for cryptocurrency lending firms. During Wednesday’s market correction lenders were more prepared.
“The latest dip didn’t hurt as much as March 2020, but it did clear out “excess leverage,” said Nexo co-founder and managing partner Antoni Trenchev. “It was so rapid. Because there was quite a lot of leverage, that’s why the crash was so deep,” Trenchev also added. “Now that it’s cleaned up we don’t have such excessive leverage in the system right now. That’s why we’re seeing this recovery right now.”
Sources: Yahoo Finance, Coindesk, Cointelegraph