Bitcoin experienced a precipitous drop this Monday morning when it fell in price by more than 15% and touched the $ 50,000 area and then recovered. As of press time, the price of BTC is hovering around $ 53,500.
After hitting a new all-time high above $ 58,300 over the weekend, contrary to expectations of reaching $ 60K, the main cryptocurrency fell $ 8,000, to the surprise of the entire crypto ecosystem, and experimented again. signs of extreme volatility.
The decline seemed to accelerate when the US Treasury Secretary Janet Yellen described Bitcoin as a “highly speculative asset, extremely inefficient for transactions . ” Speaking at a New York Times event, Yellen said the amount of energy consumed in processing those transactions is ” staggering .”
Hours after the statements, the top cryptocurrency by market value rebounded and rose to more than $ 51,000, decreasing the daily drop percentage to just over 10%. Experts said that this rally could be halted and there is room for a further decline in the price of bitcoin before returning to the path of growth once again.
David Lifchitz, CIO of Paris-based quantitative trading firm ExoAlpha, said that “a 15% correction could take place, which would take a bit of steam out of the bull market, before reaching new highs” adding that “the more Parabolic and faster is a movement, the more fragile it is, so a pullback would be more than welcome. ”
Another reason for this decline can be seen in the increase in the yields of US inflation-adjusted bonds.
The 30-year inflation-adjusted return, or real return, has turned positive for the first time since June 2020, and the 10-year real return has increased to -0.80% from lows close to -1.05% observed. last month, according to data provided by the United States Treasury.
A continued rise in yields could propel the US dollar higher, putting selling pressure on stocks and crypto assets (or bitcoins).
Joel Kruger , currency strategist at LMAX Digital, warned that the pullback in the bitcoin price could go as far as the $ 42,000 range . When on January 8, 2021, BTC reached its all-time high of USD 41,962, it marked a resistance level and after a few days it fell towards USD 33,000. That resistance set at $ 42K could only be overcome after Tesla’s multi-million dollar investment announcement a month later on February 8.
Experts and analysts agree that the two big jumps of BTC in recent months, the first, which took it from USD 10k to USD 42K and the second, the increase of almost 100% in a month, which moved the price of Bitcoin from $ 30,000 to $ 58,000, was too steep, so a market cooling seems to be healthy.
The USD 50,000 barrier appears to be the first stop of this retracement stage, which can continue in a second tranche to USD 40-42K, and place the bottom of the well at USD 30,000.
However, while other companies are expected to emulate Tesla’s decision to buy bitcoins, others may be betting on a downside and / or cash in on their profits.