The cost of the first cryptocurrency on May 19 for the first time since January dropped to $ 30 thousand per coin. What is happening in the market and can the rate go up again?
Over the past day, the cost of bitcoin on the Binance crypto exchange dropped by 33%, to $ 30 thousand, the main cryptocurrency is trading at $ 36.7 thousand. Since April 14, when the historical maximum was reached at around $ 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.
What’s happening?
Sales and liquidation of positions were provoked by a negative news background, explained Maria Stankevich, Development Director of the EXMO crypto exchange. But the $ 30K level will be a strong obstacle to further decline, as it was the support level in January and February, she added.
“Large funds will now buy bitcoins to prevent further falls. And I will agree with them, ”Stankevich says about the prospects for cryptocurrency.
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 crypto exchange, Binance. Regulators are checking the platform for violations of tax and anti-money laundering laws.
On May 16, a crypto analyst 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.
Elon 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.
Tesla has 💎 🙌
— Elon Musk (@elonmusk) May 19, 2021
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, where 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. On May 19, the investment bank JPMorgan reported a decrease in the interest of institutional investors in bitcoin . His analysts came to this conclusion after analyzing the investments of large investors in bitcoin futures on the CME Group exchange.
What does it mean?
Formally, overcoming the $ 32 thousand mark may mean a global trend change to bearish, noted Nikita Zuborev, senior analyst at Bestchange.ru. According to him, a small impetus was also caused by a panic sell-off – fixing of losses by private investors under the influence of emotions. This exacerbated the fall.
In the short term, in the coming hours and days, the market may partially win back the fall, but now there are much more risks, the specialist warned. He recommended to closely monitor the situation in order to be able to assess the consequences of the incident.
Calm down, this has already happened
In 2018, a drop in cryptocurrency quotes led to the beginning of a long-term correction that lasted almost two years. If in December 2017 the bitcoin rate reached $ 20 thousand, then by mid-February 2018 the cost of the main cryptocurrency fell by 62% to $ 6.8 thousand, and a year later from reaching the maximum – to $ 3.1 thousand. The cryptocurrency updated its maximum only three years later, at the end of 2020.
There are still no sufficient prerequisites for the collapse of bitcoin to $ 12-15 thousand from current values, the head of the analytical department of AMarkets Artem Deev, who named the key mark at $ 32 thousand, is sure. If bitcoin stays at this level, then in the coming weeks it will again move to growth. In this case, large players will again start buying assets from retail investors.
