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© Reuters.
Investing.com – After a few days of strong recovery, it turned to its ugly market face today, with a loss of $ 3,000. The market now remembers that digital currencies have to adjust or they are doomed to collapse again and again.
The reason for this decline was traders and investors, who saw their Bitcoin accounts grow strongly in 2020, and decided to suddenly exit today to take advantage of the White Friday opportunities.
The same thing happened in 2017, when Bitcoin peaked at $ 20,000 before Christmas. This psychological number has prompted many investors to exit, rack up profits, and enjoy Christmas. And after the liquidation it fell back in the form of over $ 3,000, so the question now is whether there is a bigger drop ahead, or will cryptocurrencies correct their pace?
On the one hand, today is different from 2017, thanks to the merger of Bitcoin with the global financial system. In addition to stricter regulatory tightening on trading platforms, hedge funds and ETFs. This makes the king of cryptocurrency more diverse than he was in 2017, at the height of the bubble.
On the other hand, it remains the property of small investors who dream of accumulating wealth quickly. They imagine an increase of 20,000, 50,000 and finally 100,000, but at the same time, they are afraid of any decrease, and they rush to exit the market and make a profit. These people are motivated by what is called “the psychological state of the herd”. And they respond to any event, no matter how small, because they see that “there is no smoke without fire”. This means that they exit the market at any fluctuation, so that a simple correction turns into a failure. Unlike hedge funds, they do not leave their assets on such fluctuations.
Overall cute, but no surprise what she’s been through. From the outside it appears as a get-rich-quick opportunity, and it is controlled by traders and small investors, who are afraid of their capital, and by not well-established institutions that bet and conduct price research. that affect the morale of their audience. These days, a new test for Bitcoin, for the world to see if it will resume its great collapse seen in late 2017 and early 2018.
While it has remained volatile today after the collapse earlier this week.
Fusion Media or anyone involved in Fusion Media will not accept any responsibility for any loss or damage resulting from reliance on any information, including data, quotes, graphics, and buy / sell signals contained in this website. Be fully informed of the risks and costs associated with trading in the financial markets, it is one of the riskiest forms of investing possible.
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