Bitcoin, the world’s largest cryptocurrency, has experienced nearly two weeks of bearishness, causing it to break down on Thursday night to a two-month low. The fear surrounding the future momentum of crypto has intensified panic selling, resulting in a drawdown in price.
Bitcoin price dropped from $21,712 on Thursday to $20,357, marking a 6.25% decrease at the time of writing. This drop added to the ongoing fall in price, bringing the five-day crash to 9.19%. In the same span, BTC lost its support of $22,000 as well as the critical support of $21,410.
Possible Reasons for the Price Drop
The drop in Bitcoin’s price could be attributed to various reasons, including regulatory scrutiny, the increasing popularity of alternative cryptocurrencies, and the current state of the economy.
Regulatory Scrutiny: Bitcoin’s price could be impacted by regulatory scrutiny, as countries such as China and India have taken steps to ban cryptocurrencies in the past. Moreover, the U.S. Treasury Secretary, Janet Yellen, recently stated that Bitcoin is “extremely inefficient” and is often used for illicit activities.
Alternative Cryptocurrencies: Bitcoin’s market dominance has decreased from over 70% to around 60% in recent years, with the rise of alternative cryptocurrencies such as Ethereum and Dogecoin. These cryptocurrencies have become more popular due to their functionality and faster transaction speeds.
Current State of the Economy: The current state of the economy could also have a significant impact on Bitcoin’s price. The COVID-19 pandemic has caused economic uncertainty and volatility, resulting in investors seeking more stable assets.
Implications of the Recent Crash
The recent crash in Bitcoin’s price has several implications for the future of cryptocurrencies.
Firstly, the crash highlights the volatility and risk associated with investing in cryptocurrencies. Cryptocurrencies are still relatively new, and their prices can be highly unpredictable.
Secondly, the crash could lead to increased regulatory scrutiny, as governments may seek to regulate the cryptocurrency market to prevent further instability.
Lastly, the crash could lead to a shift towards alternative cryptocurrencies, as investors seek more stable and reliable options.
Bitcoin’s recent crash to a two-month low has raised concerns about the future momentum of cryptocurrencies. The drop in price could be attributed to various reasons, including regulatory scrutiny, the increasing popularity of alternative cryptocurrencies, and the current state of the economy. The crash highlights the volatility and risks associated with investing in cryptocurrencies and could lead to increased regulatory scrutiny and a shift towards alternative cryptocurrencies.