In May, the price of the main cryptocurrency Bitcoin fell by half compared to the April maximum of $ 64.3 thousand.What needs to happen for the cryptocurrency to fall in price further, and how will this affect the crypto market?
Over the past month, bitcoin has fallen in price by almost a third and on May 28 is traded at $ 36 thousand. The cost of the main cryptocurrency in May has decreased by more than half compared to the historical maximum of $ 64.3 thousand, recorded on April 14. Experts explained whether the bitcoin rate could drop to $ 10 thousand, and what events could lead to this.
Decrease possible
Bitcoin fell to $ 30 thousand due to the negative information background, but all prohibitions and tightening of regulation are already included in the current price, says Mikhail Karkhalev, financial analyst at Currency.com. In his opinion, in order to reduce the value of the main cryptocurrency to $ 10 thousand, something extraordinary must happen.
If we pay attention to how large players use the current decline for purchases, then even a fall to the level of $ 20 thousand will only increase the appetite for purchases, the analyst notes. Despite all the events that are currently taking place on the crypto market, Mikhail Karkhalev predicts growth to $ 80-85 thousand by the end of 2021.
After the price of bitcoin dropped to $ 30,000, the largest outflow of cryptocurrency from cryptocurrency exchanges was recorded in the last year . Users per day withdrew about 175 thousand bitcoin to cold wallets for $ 7 billion at the exchange rate at that time. This led to a decrease in stocks of digital coins on exchanges to a four-month low. The collapse of the exchange rate was used by large investors to buy bitcoin.
In such a volatile market as cryptocurrency, any amplitude of price changes is potentially possible – the only question is how likely it is, explained the leading strategist of EXANTE Janis Kivkulis. He argues that the $ 10,000 mark could act as the low point of the global decline where Bitcoin could come by mid-2022. But for this there must be a combination of negative factors, in other words, for “everything to go wrong,” the strategist added.
Behavior of large investors
Companies that have already invested in bitcoin, for example, Tesla and MicroStrategy, even with the most negative outcome and the Bitcoin fall to $ 10 thousand, may remain with their investments, says Janis Kivkulis. However, in his opinion, this cannot be seen as a reliable growth factor for cryptocurrencies.
Tesla announced its investment in bitcoin in early February 2021, having bought a month earlier cryptocurrency for $ 1.5 billion. From the financial report for the first quarter of 2021, it became known that Tesla sold 10% of bitcoin at the end of March and recorded a profit of $ 101 million. According to Bitcoin Treasuries, Tesla owns $ 1.58 billion in bitcoin as of May 28.
The largest cryptocurrency holder among public companies is the software maker MicroStrategy. The company owns 92 thousand bitcoin for $ 3.37 billion. On average, the company paid $ 24.4 thousand for a coin.
If the price of bitcoin collapses to $ 10,000, major players, far from creating cryptocurrencies and their infrastructure, will take a long pause with new investments in the sector and return to this market only months after the start of a new cryptocurrency rally, leading strategist EXANTE predicts.
According to Mikhail Karkhalev, a partial exit from bitcoin of large investors is still possible, but they will do this to fix profits in order to make additional purchases of cryptocurrency.
“They will leave most of their capital in bitcoin. Simply put, if the decline continues, capital will be released from the profit for further purchases, ”the analyst explains.