Cryptocurrencies are assets that fluctuate strongly in price. Declines of 20% or even 30% can be classified as something "typical" for this market. If you are wondering why Bitcoin cost $ 40,000 on one day and suddenly fell to $ 30,000 on the second, we have answers to these and other questions for you!
Bitcoin price - why has it dropped?
At the moment when BTC stumbled, many critics and biggest enemies of this cryptocurrency began to attack it, claiming that it was nothing more than a speculative bubble. While some new entrants may have believed it, those who have been in the market for much longer, or have closely followed the Bitcoin chart, know that these types of declines are "the norm".
Let's take a look at what happened with the price of this cryptocurrency during the boom in 2017. Well, before it reached the historical level of USD 20,000, the so-called pullbacks - decreases by 30% or even 40% - their average is around 35%. These were not one-offs, such strong corrections occurred several times, yet Bitcoin would get up after each such fall to continue the climb!
Although what recently happened on the market could scare new investors who had just bought this cryptocurrency with the hope that its price would only grow, experienced BTC users remained calm.
Looking at the current price of the oldest cryptocurrency, we can see that it has slowly started to recover. It currently trades around $ 36,000 per coin.
What could have triggered the sale?
Yesterday we reported that long and short positions worth $ 2.75 billion were liquidated on cryptocurrency exchanges. Several traders said the Bitcoin market was simply overloaded.
While BTC is at record highs, many investors have started taking profits. According to Scott Minerd, investment director at Guggenheim Partners, "Bitcoin's parabolic growth is unsustainable in the near term." The man indicated that the target of $ 35,000 had been surpassed by this cryptocurrency, so it was time to "take some money from the table".
FOMO - the greatest enemy
Although some investors have decided to exit Bitcoin, it should be noted that whales - people with at least 1,000 BTC started to buy this cryptocurrency. This in turn means that they are counting on even greater gains!
A few days ago, the director of technology for the Glassnode platform - Rafael Schultze-Kraft pointed to the relationship between the price of Bitcoin and the growing number of large holders of this cryptocurrency. Whales gradually increased their resources as the rate increased to levels above $ 40,000.
While the BTC market crashed, some institutional and individual investors took it little offense. For example, Nick Carter - founder of Castle Island Ventures, wrote that after witnessing a drop in Bitcoin's price by more than 50% in a seemingly mature market last year, nothing bothers him anymore. He added that he felt nothing when the BTC rate reached $ 40,000 or when it fell to the region of $ 30,000. In addition, he stated that emotions would probably only arise at $ 100,000 per coin!