At the time of writing, bitcoin – the world’s number one digital currency by market cap – isn’t doing so hot. The currency has fallen to about $46,000 per unit at press time, meaning it is now about $10,000 lower than where it stood during the early portion of last week. Things are not looking good for the asset, but how much of this is just part of a healthy correction?
Bitcoin Has Taken an Ugly Dip
As it turns out, things may be a little more extreme than normal. While there’s no way to predict if this is a final stretch for the world’s most popular cryptocurrency, the asset is experiencing losses it hasn’t seen in almost a year. The currency has fallen by about 21 percent in just the last few days alone and hasn’t dropped this much since March of 2020.
During that time, the coronavirus pandemic first began striking all corners of our global markets, and many assets – bitcoin included – began to witness dips nobody could have anticipated. Stocks fell to record lows, while precious metals such as gold also incurred heavy dips. Bitcoin – which during the previous month, was trading for well over $10,000 – fell below the $4,000 mark, and the dollar began experiencing heavy inflation.
Furthermore, many platforms centered around bitcoin and the world’s leading crypto assets (such as Ethereum) are also experiencing a few stumbles here and there. For example, the Bloomberg Galaxy Crypto Index – which monitors BTC, ETH and three additional crypto assets – has fallen by about 23 percent over the past week.
The Grayscale Bitcoin Trust has also been suffering, experiencing heavy slumps following the expiration of several bitcoin futures contracts in the past few days. The trust has fallen by as much as 20 percent since late last week.
Vijay Ayyar – an executive with cryptocurrency exchange Luno in Singapore – explained in a recent interview that the U.S. dollar is beginning to rebound, which could be why bitcoin is heading into darker territory. He says:
Risk-on assets are taking a hit at this moment. We’re seeing stocks slide and crypto is following. The dollar is strengthening, which is a good indication to expect a slide in bitcoin and crypto.
Standard Assets Are Staging a Comeback
In addition, gold – which has been declining somewhat in recent days – is also making a slight comeback, with one ounce now trading for well over the $1,700 mark. Clearly this is a case of traditional finance working to repair itself, and as we understand by now, bitcoin ultimately survives when standard markets are in chaos or having a hard time. When things are steady or neutral in this respect, bitcoin will likely trade in a lower register.
At press time, many are still laying the blame on Elon Musk, who recently tweeted that bitcoin’s price was “too high.” Things began taking a nasty toll from there.