After months of rise, Bitcoin experienced a sudden decline. Should investors be concerned?
Since November 2020, the price of Bitcoin has been on a continuous rise, with the exception of a brief dip at the end of January. At its peak, the value of one bitcoin was $ 57,355.29 (EUR 47,583.38). That was the highest price point a crypto coin could ever reach.
But in the past week, bitcoin fell off its pedestal again. The market put on the brakes, so that the price level at the close of the stock exchange on Friday evening was still around 47,000 dollars (39,000 euros). In a week’s time that is a price drop of 20%. For a stronger decline, we have to go back to March 2020, when bitcoin worth $ 5000 was not really on the party. What has caused that rise, and should crypto investors be concerned about further decline?
Higher interest rates
There were certain indications that a price drop was imminent. The Grayscale Bitcoin Fund, one of the largest crypto investment funds, made big sales. In addition, there was another tweet from Elon Musk about bitcoin. A week ago he tweeted that the price of bitcoin is too high in his opinion. If Musk says something about bitcoin, a response from the market will not be delayed. It can be a strategic move by investors to bring the price down again.
There are also developments in the stock market that bitcoin investors have less control over. Analysts suspect a flare-up in long-term interest rates is also not a good thing for crypto coins. This increases the value of ‘physical’ currencies such as the dollar, which is often at odds with the growth of digital currencies. In addition to bitcoin, other major crypto coins recorded losses, and even ‘risky’ tech companies such as Tesla took part in the blow. The car company saw its value decline by 11%, costing Elon Musk the title of richest man in the world.
Rise or fall?
What will the bitcoin price do this week? The honest answer is that it is difficult to predict. Since the corona pandemic, world stock markets have been incredibly unpredictable, periods of growth are constantly alternated with deep troughs. Bitcoin has made unpredictability its specialty, and that does not deter investors.
Analyzes present two scenarios for how the price will continue to evolve this week. The first scenario is that the exchange rate will recover to a price level of $ 50,000. But the price could just as well fall further towards $ 40,000 or lower. Today we may know which direction it is going. Bitcoin has already started the first hours of today well. The course saw a slight increase of 4.61% to USD 48,278.44 (EUR 40,123.70).
To invest or not?
Opinions on Bitcoin and other cryptocurrencies remain very divided, including in the tech sector. Elon Musk has repeatedly expressed his interest in bitcoin, while Bill Gates advises against investing in it. We therefore asked our readers via a poll what they think about crypto coins. As we expected, the results were very fragmented. Of a sample of 592 respondents, 23% indicated that they had invested in crypto coins. 29% answered that they found no investment. 7% has not quite decided yet. In the image below you can see the full results:
Do you dare to make a prediction? Leave a comment at the bottom of this article.