It was only recently that Bitcoin had topped market value of $1 Trillion, making Elon Musk, who had invested $1.5 billion through Tesla in bitcoin, the richest man in the world. The cryptocurrency has also managed to lure interest from leading credit card giants like Master Card. The company had made an announcement that it would accept some cryptocurrencies in its network. However, on Tuesday (today) the prices of Bitcoin dropped below the psychological barrier of $50,000. Did sharp warnings from Treasury Secretary Yeller send panic across the market? Or, is this start of a bearish cycle?
Bitcoin has experienced a meteoric rise in the year 2020/21. Breaking records after records, Bitcoin price shot up to an all-time high of $58,332 almost doubling in value from the 2020 year-end closing price. However, Bitcoin is down by 11.9% today and is currently trading at $48,617, which is not necessarily low, but enough to swipe significant wealth from the market.
We know Bitcoin prices have soared by more than 50% and fundamentally it is in a stronger position than it ever was. But, we also know that it is in the nature of financial markets to go through a cycle of bullish and bearish trends. So, is the market signaling an overdue cooling-off period for Bitcoin?
There are some factors that indicate so….
Increase in Price-Volume Divergence
The price-volume divergence indicates the difference between the price and volume of Bitcoin. Growing divergence indicates that there is fewer new capital entering the market, and the buying frenzy is slowing down. This could mean that investors are either being cautious of investing further into the asset class, or they are becoming holders. In such circumstances prices become horizontal and volatility also drops.
March is the harbinger of Tax
March is a season of taxation for Americans. This could have prompted traders to sell their Bitcoins to cover tax bills. This could be another reason why the prices of Bitcoin are falling. Historically Bitcoin has been subjected to the effects of seasonality. Over the years, March and September have mostly been the worst months for Bitcoin.
However, Bitcoin could also be reacting to snarky remarks by Treasury Secretary Janet Yeller. According to whom, “ Bitcoin and other cryptocurrency is an extremely inefficient way of conducting transactions.” However, Yeller has counter-intuitively also said that “digital currencies are likely here to stay and the digital dollar could serve an easier payment for many Americans who do not have that access.”
Regardless of whether you are taking a long or short position, it’s essential to keep your cryptos safe. Download XcelPay Wallet the most secure and one-of-a-kind crypto payment solution to buy, sell and store your cryptos.
uq3s7.app.link
To the question in your title, my Magic 8-Ball says:
Hi! I'm a bot, and this answer was posted automatically. Check this post out for more information.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit