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Bitcoin price reverses gains on New Year’s Eve

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On Dec. 31, Bitcoin (BTC) and the larger cryptocurrency market fell later in the day, wiping out intraday gains and putting an end to a year that had been extremely successful.

Market Update

According to research, the price of bitcoin dipped below $46,000 on December 31 and has been staying around that level since. The flagship cryptocurrency is currently trading at $45,933, down almost 5% from its intraday high and down 2.9% for the day.

Bitcoin’s price is back on the defensive as the year draws to a close. Source: Cointelegraph Markets Pro

Altcoins followed Bitcoin’s negative trend, with Ether (ETH), Binance Coin (BNB), and Solana’s SOL all plummeting more than 2%. Cardano’s ADA fell almost 4% on the day.

According to CoinGecko, the overall market capitalization of all cryptocurrencies fell by nearly $100 billion from its intraday high of $2.4 trillion to $2.27 trillion.

The crypto market cap was down more than $100 billion from its intraday peak. Source: CoinGecko

The abrupt turnaround came after a small relief rally for Bitcoin and other cryptocurrencies on December 31st. Bitcoin’s price increased by more than $1,500 in less than an hour, according to reports, a spike that may have been assisted by a $6 billion December options expiry event.

Crypto OGs continue to grow in number

Bitcoin is expected to have a year-to-date return of less than 60%, which is considerably below the predictions made by many, if not all, prognosticators at the beginning of 2021. Despite the fact that BTC has never approached six-figure valuations, it continues to draw investors with a short time horizon. (Investors with a low temporal preference focus on their financial well-being in the future rather than the present).

The so-called crypto tourists who entered the market in the summer are mostly responsible for BTC’s current price fall. Veteran holders are still selling record-low sums of BTC as of late December, according to a new article. Meanwhile, towards the end of the year, buying activity on Coinbase appeared to have increased significantly.

“The true OGs are hanging tight”, stated UTXO Management analyst Dylan LeClair earlier this week. Referring to long-term Bitcoin holders having a far lower on-chain cost base than those now selling. Long-term BTC holders have an average on-chain cost basis of $17,825 vs. $33,890 for individuals who are currently spending their coins.

In 2021, the crypto market saw an infusion of sophisticated institutional investors. In addition to the retail-oriented class of long-term hodlers. According to CoinShares data, net proceeds into crypto funds hit $9.3 billion in 2021. With Bitcoin accounting for more than two-thirds of that amount. Until December 13, these funds had received inflows for 16 weeks in a row.

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