Well, it looks like bitcoin has taken a fall in the past 24 hours, but why?
Bitcoin Dips in the Past Day
Just a day ago, the world’s number one cryptocurrency by market cap had crossed the $13,000 line for the first time in over a year. The asset had shot up to approximately $13,100 and many were celebrating that things were really turning around for the coin, which had had a rather dismal September.
The price expansion came following news that PayPal – arguably the largest digital payments system in the world – would allow customer to pay for items and services using bitcoin. This was huge to many traders and enthusiasts everywhere, who showed great enthusiasm for PayPal’s newfound love of crypto. This was sure to launch bitcoin into the mainstream universe and make it comparable to cash on all levels.
However, it looks like some of those positive vibes have seemingly fallen off. The price of the world’s largest cryptocurrency has dropped by about $200 in the past day, and the asset is now trading for about $12,800 at the time of writing. So, what the heck happened?
There are several different explanations, but there are two that are likely the most realistic. The first is that the hype train is dying down a bit. The PayPal news was rather solid. At the same time, it was about a week ago when this was first announced, so there’s a good chance many individuals and sources are no longer talking about it, and if they are, they’re just touching on simple facts rather than reminiscing about the entire story.
However, the second reason is likely that some bitcoin holders are selling all or parts of their stashes. Now that the price of the cryptocurrency has seemingly taken a few steps forward and reached a new high for the year, short-term traders and investors are potentially just seeing some quick dollars in their futures. They view bitcoin through a short-term lens and figure now is the time to trade in and get some cold, hard cash in bitcoin’s place.
Don’t You Want More Moolah?
This is a mistake for many reasons. For one thing, bitcoin is meant to be held long term. As soon as many people trade theirs in, they’re likely to knock the price down for everyone else. Second, if bitcoin is showing steady levels of appreciation, clearly there may be more relatively soon, so with this in question, doesn’t it make sense to hold onto the asset for a while longer?
At this stage, all investors can do is hope that this downward trend is temporary and won’t lead to worse results. Bitcoin was headed for a strong end to 2020, and with two months left in the year, perhaps that positive end is still a possibility.