Bloomberg: Why is Bitcoin plummeting? What are the prospects?

Bitcoin’s roller coaster ride has started to go downhill again. Last Sunday (April 18), BTC fell by 15%, and prices such as ETH and XRP also fell sharply.

Last Wednesday (April 14), on the first day of listing on Coinbase, the largest token exchange in the United States, the price of Bitcoin hit an all-time high of more than $64,000, sparking all the enthusiasm for cryptocurrencies.

While bitcoin prices stabilized late Sunday and early Monday in Asia, at around $57,000 at the time of writing, they are still down about 12% from last week's intraday highs.

So, what caused this decline?

As usual, there is no clear answer to this question, especially for opaque assets like cryptocurrencies - it is often unclear who is selling or buying. But analysts point to various reasons.

Regulatory concerns

Regulators around the world are taking a greater interest in digital assets as they gain further traction with retail and institutional investors.

Bloomberg: The plunge in the encrypted market has led to the collapse of luxury watch markets such as Rolex and Patek Philippe: According to news on August 31, Bloomberg stated that with the collapse of the cryptocurrency market, the supply of second-hand luxury watches There has been a significant increase, which has lowered the prices of relatively rare luxury watches such as Patek Philippe and Rolex in the past. According to a statement issued by Chrono24, an online watch trading platform, the supply of rare luxury watches such as Patek Philippe 5711A and Rolex Daytona in the second-hand market is much larger than before. The recent downturn in the crypto market has directly affected the supply of such high-end luxury watches. Table pricing.

According to the website, the Patek Philippe 5711A, which retails for $35,000, soared to $240,000 in the first quarter, but has now fallen back to $190,000. [2022/8/31 12:59:42]

On Friday, Turkey’s central bank said it would ban the use of cryptocurrencies as a form of payment starting April 30, and banned companies that process payments and electronic funds transfers from processing any transactions involving cryptocurrency platforms.

Bloomberg: India's ban on cryptocurrencies is stupid on multiple levels: According to a Bloomberg article, India's cryptocurrency ban is not the first attempt at currency control. However, this time the ban is less likely to succeed and the consequences for the Indian economy could be more dire, such a blanket ban would be foolish on multiple levels. Because enforcing the law is much more difficult, the government would face the challenge of finding and locating the cryptography holding millions of bitcoins, and the government would not be able to seize or even access computer networks scattered around the world. To enforce the ban, authorities had to develop an intrusive surveillance system that could track all digital and internet activity in the country. Thankfully, India does not have the national capacity to achieve this, and it is more likely that its efforts will only drive the cryptocurrency market underground. [2021/3/20 19:02:41]

Crypto market participants also speculated over the weekend that the U.S. Treasury Department is preparing to crack down on money laundering through digital assets. The U.S. Treasury Department declined to comment.

Other sources of regulatory pressure include central banks’ plans to create digital currencies (such as China’s digital yuan), and the ban on cryptocurrency mining in Inner Mongolia (the region has long been a mining darling due to cheap electricity in Inner Mongolia).

Sound | Bloomberg: Stock market declines and uncertainty may prompt investment to turn to the digital currency market: According to a Bloomberg report quoted by ethereumworldnews, due to lack of interest, Wall Street capital is gradually not getting involved in digital currencies. However, recent stock market declines and uncertainty have investors looking to move away from traditional markets and into the price-stable Bitcoin market. [2018/11/13]

"We're going to see more regulation," said Eva Ados, chief investment strategist at asset manager ERShares. She warned investors to be "very cautious." "We think there will be more volatility going forward."

overexcited

Any sharp rally has the potential to take the market beyond itself to new highs.

That’s the view of Galaxy Digital founder and crypto industry veteran Michael Novogratz. He wrote on Twitter that he thought the slide was a healthy adjustment.

Analysis | Bloomberg: Momentum indicators show that the next bull market is coming: According to a Bloomberg article, Bitcoin bulls are looking for new technical signals, hoping to reverse the recent decline and start pushing Bitcoin higher. Based on the analysis of the RIG trendline which combines the relative strength indicator (RSI) and momentum studies, the momentum gauge (momentum gauge) crosses the RSI, which may signal a positive move in price. This is the fourth time the momentum indicator has crossed the RSI this year, and each time it has seen Bitcoin price rise. [2018/9/28]

Special factors

Other factors may also come into play. Industry news site CoinDesk reported on Saturday that a power outage in parts of China has led to a significant loss of bitcoin mining capacity, reducing the cryptocurrency's overall hash rate.

There is also the matter of timing.

"Bitcoin tends to get wild on the weekends because it's one of the few markets that is (still) open for trading," said Kyle Rodda, a market analyst at IG Group in Melbourne. "And it lost some buying support. .”

How much is the decline?

Given the frequent warnings of speculative mania in cryptocurrencies by mainstream financial data, any sharp drop would revive memories of the 2017 crash. At the time, Bitcoin fell from over $19,000 to less than $4,000 in late 2018.

While the current decline is notable, it's not on that scale. The current price of Bitcoin is still 93% higher than it was in January of this year. Volatility is the norm for this asset class: Sunday's 15% intraday drop was only the biggest since February.

At the same time, ETH fell as much as 18% at one point and closed down 9.4% on Sunday, but its price is still up more than 200% this year.

What is the price outlook?

One problem with cryptocurrency price predictions of any kind is that there aren't many fundamental indicators on which to base your predictions. A lot depends on whether institutional investors will buy, and whether Bitcoin whales will sell.

According to research firm Flipside Crypto, less than 2 percent of anonymous owner accounts control 95 percent of Bitcoin's available supply. This means that a large holder (whale) can have a huge impact on this still illiquid market.

A key difference from the prolonged crash of 2017 is that many institutional investors now have some stakes in this crypto market. For example, Brevan Howard Asset Management last week became the latest fund manager to reportedly invest in digital assets.

Morgan Stanley and Goldman Sachs are both now planning to offer clients access to investing in cryptocurrencies, in a further sign of growing interest among the wealthy.

For some, the $68 billion market capitalization of cryptocurrency trading platform Coinbase justifies betting on a watershed boost in cryptocurrency adoption.

Jehan Chu, managing partner of Hong Kong-based cryptocurrency consultancy Kenetic Capital, said: "The public market validation of Bitcoin and the entire (crypto) space after Coinbase's listing will encourage those who can afford to invest in the market to invest in." He added , there are signs that retail investors are taking advantage of the Bitcoin drop.

While others worry that Coinbase's listing and Bitcoin's volatility are part of an unsustainable (U.S.) stimulus-fueled frenzy and that regulation will become increasingly difficult as digital tokens and related businesses gain more mainstream acceptance. Agencies tend to tighten their regulation.

In January, analysts at JPMorgan Chase said bitcoin could be worth $146,000 in the long run, but they recently slashed that target to around $130,000.

Chris Weston of Pepperstone, one of the world's largest forex brokers, wrote in a note to clients: "There was a lot of social enthusiasm about the possible near-term prospects for cryptocurrencies (prices). got support."

How do you view this decline and future trends? Welcome to express your views in the comment area.

This article was first published on Unitimes App

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