Bitcoin has dropped severely this past week, falling from $11,700 about ten days ago to roughly $10,050 just yesterday. Now, it’s trading for just shy of $10,400, which means the currency has hiked itself up a bit in the past 24 hours, but it’s still a major fall.
So, Why Is Bitcoin Falling All of a Sudden?
One of the reasons could be because tensions over the U.S.-China trade war have seemingly loosened up a bit. At press time, some stocks are showing signs of recovery, and bitcoin – along with other assets like gold – are looked at as “shields” against economic downturns. Thus, it makes sense that bitcoin would suddenly spike over the last two weeks following announcements that President Trump would be enforcing further tariffs on approximately $300 billion-worth of items from China.
Now, however, some of these fears and tensions are beginning to dissipate, which means that bitcoin and other forms of crypto are suddenly down for the count given that people aren’t looking at them through the same lens as they were 12 days ago.
Overall, it seems the currency has fallen by anywhere between 12 and 15 percent over the past week alone. Analysts say that the idea of bitcoin serving as a “safe asset” has somewhat evaporated. Matt Maley, an equity strategist at Miller Tabak + Co. explains:
People thought at certain points in the last year or so that cryptocurrencies would become the flight to safety trade. The cryptocurrency is losing some of that luster of being considered a safe asset.
Fears arose recently regarding bitcoin’s alleged ties to a potential Ponzi scheme. According to a Twitter post submitted by crypto influencer Dovey Wan, individuals involved in a Plus Token scam were potentially selling several thousand bitcoins in small batches.
However, researchers at Token Analyst explain that this likely isn’t the case, and bitcoin’s drop is simply part of a moving economy.
Company co-founder Sid Shekhar spoke of the crypto wallet addresses associated with the Plus Token trades. He explained:
It doesn’t look like any of these addresses are exchange owned, so that was enlightening. We’ll keep an eye on this to see if they do move the 100s of millions into exchanges at some point.
What Can We Expect Now?
The big question now is, “Where will bitcoin go from here?” Can we expect to see further drops in the coming weeks, or will the coin recover and resort to bullish behavior sooner than we might expect?
Given that the currency has spiked again and is trading for $300 higher than where it stood just a day ago, we can probably expect a small recovery stage in the immediate future, though given we’re about to enter the final quarter of the year, it’s hard to say what will happen for sure.