Valentine’s Day is a time of love and affection. A time when couples gift each other with flowers, chocolates, jewelry, a nice meal or anything else that lets the other know how much they mean to them. However, it’s always hard when one’s partner gives off mixed signals, and for bitcoin, that’s exactly what happened during the holiday weekend.
Bitcoin Has an Up-and-Down Holiday
Valentine’s day saw bitcoin spike to nearly $50,000 for the first time in its short, yet significant history. The world’s number one digital currency by market cap shot up to well beyond the $49,000 range, causing many to think that $50K was just around the corner. Following the spike, analysts – naturally – took to social media and news outlets to offer their ideas regarding what had caused such a monster price spike within the relatively short period.
Patrick Campos – the chief security officer at blockchain firm Securrency – claimed that there have been many announcements over the past week regarding major institutions such as Tesla, BNY Mellon and others turning to bitcoin as a means of attracting new business and building financial infrastructure. In a recent interview, he stated:
With each major announcement like the one BNY Mellon made, other institutions are spurred to more rapid adoption and deployment of digital assets. Tesla’s recent announcement will embolden other large corporates and institutions to accept crypto as not just a worthy asset class, but perhaps even an essential one. More important is the corresponding build-out of institutional services to support these developments will trigger other digital asset-related developments within those institutions and in the larger ecosystem.
This would have all been great granted bitcoin decided to remain where it was. However, following the spike, the currency decided to take a nosedive south, suggesting that perhaps the rise was nothing but a simple product of temporary hype. At the time of writing, bitcoin is now trading in the mid-$48,000 range, which isn’t much of a drop, but it’s now gotten farther away from that $50,000 goal.
This Happens Around This Time of Year
Some of the reasoning behind bitcoin’s sudden fall may have to do with the Chinese Lunar New Year, which has seemingly led to minor drops in the past. The event occurred over the weekend, and Chris Weston – head of research at Melbourne brokerage Pepperstone – mentioned that the present circumstances do not necessarily give institutions and other traders an immediate opportunity to buy, and that a little wariness may be of use. He comments:
There’s this unadulterated wave of big players [buying] that has continued to push the price higher. We might be seeing one or two big funds just cashing out. The big question is, ‘OK, you want to buy the pullback, but how big is the pullback that we are talking about?’