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A new record for bitcoin is going to have to wait, if at all.
Bitcoin BTCUSD price,
BTCUSD,
Friday were hit, pushing the cryptocurrency into corrective territory, commonly defined as an asset’s decline from a recent high of at least 10%.
In the last check, Bitcoin changed hands on CoinDesk, down 2.4%, to $ 16,714, which is a drop of more than 14% from its 52-week high of $ 19,495, put less 24 hours before its Thanksgiving fall.
Bitcoin has been a traditionally volatile asset since its inception, but while those watching the closely watched cryptocurrency research the reasons for its recent decline, market participants have highlighted at least three key factors:
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Coinbase CEO Brian Armstrong hinted at tighter regulation in a Wednesday tweet
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Overbought and ready for a drop
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Bitcoin is volatility
Rumors Armstrong
A series of posts from Coinbase CEO Armstrong via Twitter are credited with part of the decline of bitcoin and the broader cryptocurrency complex. Armstrong on Wednesday hinted that the U.S. Treasury Department attempted to push through stronger regulations before the Trump administration left office.
The threat of tighter regulation has always weighed on the nascent digital currency industry, but the comments may have been enough to set in motion a bearish tilt in bitcoins which enjoyed a gain of over 130%. since the beginning of the year, experts told me.
Bonus for a pullback
Charles Hayter, founder of CryptoCompare, told MarketWatch that bitcoin’s pullback was “one of the fastest moves” he has seen, adding that it was not unexpected after the cryptocurrency took a hit. race this fast close to its December 2017 record.
“It was one of the fastest moves in Bitcoin. Naturally, there is a pullback at these points as movements from over-the-counter to over-trading take place, ”Hayter said in comments emailed to MarketWatch on Friday.
Bitcoin’s rise in the stratosphere comes as the Dow Jones Industrial Average DJIA,
is up 5% so far this year, the S&P 500 SPX index,
gained more than 12% over the same period and the Nasdaq Composite Index COMP,
has grown 35% since the start of the year. OR OR,
Meanwhile, has climbed 19% so far this year and stages a reversal of much of its rally with the emergence of viable COVID-19 vaccines.
“A good number of buyers at 10k will collect their earnings and a few who have been hiding at these levels from 2018 will be happy to exit the trade,” he speculated.
Inherent volatility
A chart released on Friday by Bespoke Investment Group highlights a key fact that bitcoin newbies need to get used to: its traditional volatility.
Bespoke wrote that declines in Thursday’s magnitude aren’t particularly unusual throughout Bitcoin’s history, noting that since 2017 Bitcoin has experienced 24 more heart-wrenching one-day declines than Thanksgiving Day (see the attached graphic):
Tailor-made investment group
While the bears can use this current retreat to explain why bitcoin is such a problematic asset, many continue to hold the asset in hopes of a more bullish horizon for cryptos.
Libra is not dead
Facebook FB,
The digital currency network, Libra, could launch as early as January, according to reports. If so, it would represent a major achievement for the story as a whole, even if critics say the Libra coin does not really represent the traditional crypto market.
That said, it could be a feather in the ceiling of supporters of digital assets at a time when virtual currencies are more attractive to the general public.
Last month PayPal Holdings PYPL,
said it would allow customers to buy cryptocurrency through their accounts and use the cryptocurrency for merchant payments, which also gave some legitimacy to the nascent asset.
General public call
Major investors, including hedge fund luminary Paul Tudor Jones, have become supporters of the asset, describing its recent rally in a CNBC interview as in its “first innings.”
These apparent endorsements highlight an increasing focus of institutional investors on bitcoin as a legitimate alternative to fiat money or other assets used to hedge their exposure to conventional investment instruments.
True, bitcoin and its counterparts, critics warn, could still drop to zero and this is where the intrigue and potential danger of digital currencies lies.
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