Last week Bitcoin fell 50 per cent from its all-time high of USD 65,000 back in April earlier this year and declined to almost USD 30,000, according to CoinDesk Data. The drastic drop did not last long, and the cryptocurrency was able to go back up past USD 37,000 and onwards within hours of the decline. The dramatic dip for Bitcoin has people talking about what will be the future for the cryptocurrency and if it is likely that we will see more of this in the future.
What led up to the drop for Bitcoin?
Bitcoin’s total market value has dropped down below USD 630 Billion when it was at over USD 1 Trillion in the springtime. Many believe that two key happenings contributed to the sudden drop last week. The main one being Tesla Inc’s CEO Elon Musk announcing that the company would no longer accept Bitcoin as a form of payment for Tesla’s vehicles. The other was comments from the Chinese Vice Premier Liu He pledging to, “Crackdown on Bitcoin mining and trading behaviour.”
Just three months ago Tesla Inc announced that they would be purchasing USD 1.5 Billion worth of Bitcoin, however the dip last week meant that Bitcoin had lost all gains made since Tesla’s announcement months ago. Musk had said he decided to stop allowing Bitcoin to be used as payment for vehicles due to environmental concerns when it came to the computational “mining process” that allows for transactions to be made with Bitcoin.
So, has Bitcoin fallen?
Bitcoin’s Relative Strength Index (RSI) has fallen to, “The lowest level since March 2020, indicating Bitcoin is extremely oversold,” according to Nick Mancini, a research analyst at crypto sentiment data provider Trade The Chain. However, Bitcoin prices are known to be extremely sensitive to change, and it is not just Bitcoin that saw a decline in prices recently. Ether (ETH) saw a decline of 22 per cent to USD 2,620.97 according to CoinMetrics.
Dogecoin, a cryptocurrency that gained momentum initially as a joke due to Elon Musk pushing it forward on social media, fell to around 36 cents, which was a decline of over 22 per cent. The day Elon Musk made his commentary on his concerns for the environment over the computational “mining process” for Bitcoin, over USD 300 billion was wiped from the cryptocurrency market on the same day.
How will we see Bitcoin doing in the future?
Ulrik Lykke, the Executive Director at crypto hedge fund ARK36 expressed their confidence in Bitcoin, “In terms of Bitcoin’s outlook, things may be looking grim right now, but historically this is just yet another hurdle for Bitcoin to overcome and a small one compared to what it has braved in the past.” Others are also sharing the positivity, like Julian Emmanuel, the Managing Director and Chief Equity and Derivatives Strategist at BTIG who said his year-end price target for Bitcoin was USD 50,000.
However, some are sceptical about the future of Bitcoin, like Michael Kramer for example, the founder of Mott Capital Management, LLC who had recently written a column for his company’s blog expressing how he believes that “Bitcoin is melting” and should expect to fall further than they did last week. Mancini disagreed slightly with Kramer, stating they believe, “Bitcoin is not full-on melting, but we are seeing the first large scale correction since the bull run in early 2020.”
As Bitcoin is sensitive to change, as are other cryptocurrencies, there will always be changing opinions and fluctuating prices. However, the bad press Bitcoin has received over the past few weeks with Musk’s comments and the Chinese cracking down on crypto, the sudden decline was bound to happen.
To keep up with the latest commercial news, click on commercial to get your daily dose.
Donate & Support