Over the past day, the cost of Bitcoin on the Binance crypto exchange dropped by 33%, to $ 30 thousand. As of today, the main cryptocurrency is traded at $ 41 thousand. Since April 14, when the historical maximum was reached at $ 64.3 thousand, Bitcoin has fallen in price by half.
The last time such a collapse occurred with Bitcoin was in March 2020. Then the price of the first cryptocurrency in two days fell by more than 50% – to $ 3.7 thousand.
The sale and liquidation of positions provoked by a negative news background, experts explained. But the $ 30K level will be a strong obstacle to further decline, as it was the support level in January and February, they add.
Speaking of the prospects for cryptocurrency, it is likely that large funds will now buy Bitcoins in order to prevent a further fall.
Negative news for Bitcoin
Over the past week, there has indeed been a lot of negative news for the cryptocurrency market. On May 12, Tesla announced a temporary suspension of Bitcoin sales of electric vehicles. Due to the non-environmentally friendly way of mining them. Elon Musk also spoke somewhat critically about the main cryptocurrency, doubting its decentralization and calling the level of electricity consumption by Bitcoin insane.
Also on May 13, it became known that the US Department of Justice and the US Internal Revenue Service launched an investigation against the world’s largest cryptocurrency exchange – Binance. Regulators are checking the platform for violations of tax and anti-money laundering laws.
On May 16, a cryptanalyst tweeted that investors would be saddened if they learned in the next quarter that Tesla had sold all of its Bitcoins. To this Musk, in his usual manner, answered evasively – Indeed. But the market took this tweet as confirmation of this possibility.
Musk even unequivocally denied it. And on May 19, after the collapse of Bitcoin to $ 30 thousand, posted a tweet containing the word Tesla, as well as emojis of hands and a diamond. Usually, the phrase “diamond hands” refers to investors who hold an asset despite fluctuations in its value.
Against the backdrop of the recent drop and negative news background, investors began to withdraw funds from funds based on Bitcoin. During the week, $ 98 million was withdrawn, according to analysts at CoinShares.
On May 18, Bitcoin quotes continued to decline amid a new cryptocurrency ban in China. Here financial companies were banned from providing services related to digital assets.
On the same day, the analytical company Glassnode recorded a record inflow of Bitcoins to crypto exchanges since March 2020. This may indicate a general desire to sell the asset.
What does it mean?
Formally, overcoming the $ 32K mark may mean a global trend change to bearish. However, if Bitcoin stays at this level, then in the coming weeks it will move to growth again. In this case, large players will again start buying assets from retail investors.