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

 Owners of cryptocurrencies such as Bitcoin have had a rollercoaster ride in recent months. Bitcoin prices plummeted to as low as $30,000 per coin in mid-May after reaching as high as $60,000 per coin. Other cryptocurrencies, such as Ethereum and Dogecoin, experienced similar losses.

Although the prices have subsequently recovered marginally, it has sparked a lot of discussion online about how such large swings in price are feasible. To discover out, the Verify team spoke with specialists.

THE SOURCES

• James Angel is an Associate Professor at Georgetown University's McDonough School of Business who specialises in global financial market structure and regulation.
• Will Cong, Associate Professor of Business Administration at Cornell's SC Johnson College of Business and Faculty Director of the Cornell FinTech Initiative.

WHAT WE FOUND

It's tough to pinpoint the actual source of market volatility. Nonetheless, our cryptocurrency experts pointed out that this demonstrates how quickly values in a speculative market like Bitcoin may move.

"Part of it is just mob hysteria," Angel explained.

Unlike a business stock, where you can 'look beneath the hood' to assess revenues and losses, many cryptocurrency investors are left speculating, according to our experts.

"Bitcoin's pricing is purely speculative," Angel explained. "It depends on what other people are ready to pay for it in the future."

According to Cong, "market mood" can occasionally take over in this speculative environment.

"It's almost self-fulfilling," he explained. "At least for the time being. The price of Bitcoin might decrease to zero if everyone believes it is worthless and sells their Bitcoins."

Our experts stated they could only speculate as to what caused the massive shift in cryptocurrency values. One aspect was China's announcement that some cryptocurrency rules will be tightened.

Then there was Elon Musk, Tesla's CEO, who tweeted on May 12th. Due to environmental concerns, he declared that the company will no longer take Bitcoin as payment.

Cong said that the environmental issues existed before to Musk's post and were well-known, but that the remarks of a powerful figure like Musk might occasionally impact the market.

"In that regard, nothing essential has changed," he remarked. "However, because he tweeted about it, many others feel he's the guru - he's a knowledgeable person - they acquire new viewpoints about this coin, despite the fact that nothing basic has changed."

While this is concerning for investors, Angel explained that such a spike and fall is to be expected in a speculative market like this.

He explained, "That's human nature." "For hundreds of years, we've seen it in speculative markets. And we'll continue to see it in speculative markets in the future. It's going to be a wild ride. So fasten your seatbelt. And don't ride the roller coaster if you don't like it."

In conclusion, while cryptocurrencies prices may offer some intriguing options, it should not be considered as a get-rich-quick scam.