Why Fall In Bitcoin, Ethereum Prices In India Is Premature

Bitcoin traded above $40,000 for the first time on 8 January 2021 and reached $50,000 on 16 February 2021. On Wednesday, Oct. 20, 2021, Bitcoin reached a new all-time high of $66,974. Bitcoin’s plunging price has set off a technical pattern called the death cross, in which the 50-day moving average drops below the 200-day average. Some chart watchers think this portends trouble — hence the ominous name. But the last time this happened, in early 2020, it was around the start of a steady increase in price. In 2013, bitcoin began trading around $13 and spiked to more than $1,000 by December. In late 2017, the digital token surged to nearly $20,000, before crashing to almost $3,000 the following year. What followed was a dizzying rise to above $64,000 in April 2021. Still, some are using the recent decline in bitcoin as a buying opportunity.

Bitcoin, for instance, briefly touched $40,000 last week and fell again Monday after China’s central bank deepened a crackdown on cryptocurrencies. China’s central bank said it ordered some banks and payment firms, including China Construction Bank and Alipay, to crack down further on cryptocurrency trading. Bitcoin is currently trading at around $60,400, according to TradingView. The price of ether , the second-largest cryptocurrency, has also dropped over 7% in the last 24 hours and is currently trading at around $4,200.

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The precious metal reversed its negative correlation with bitcoin on Wednesday as seen in the chart above. Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in oureditorial policy. The price changes for Bitcoin alternately reflect investor enthusiasm and dissatisfaction with its promise. Satoshi Nakamoto, Bitcoin’s inventor, designed it for use as a medium for daily transactions and a way to circumvent the traditional banking infrastructure after the 2008 financial collapse. Julius Mansa is a CFO consultant, finance and accounting professor, investor, and U.S. Department of State Fulbright research awardee in the field of financial technology. He educates business students on topics in accounting and corporate finance.

Bitcoin was headed for its worst weekly performance since May as the price of the largest cryptocurrency by market value slid below $60,000. Investing in cryptocurrencies and other initial coin offerings is highly risky and speculative, and this article is not a recommendation by Investopedia or the writer to invest in cryptocurrencies or other ICOs. Because each individual’s situation is unique, a qualified professional should always be consulted before making any financial decisions. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein. For the most part, Bitcoin investors have had a bumpy ride over the past roughly 13 years. In spite of all this, there are periods when the cryptocurrency’s price changes have outpaced even their usually volatile swings, resulting in massive price bubbles. Bitcoin and other cryptocurrencies fell sharply on Tuesday, retreating from near-record highs.

Cryptocurrency News: Why Are Crypto Prices Dropping Today?

Many crypto analysts are expressing concerns that boast of big profits on cryptocurrency investments are deceptive. According to the daily chart, BTC could be testing the market’s small gains of $58000 levels. On Nov. 15, India’s parliamentary standing committee on finance came to the conclusion that cryptocurrencies cannot be stopped, though they have to be regulated. Meanwhile, El Salvador’s President Nayib Bukele said the country had “bought the dip”, in Bitcoin, adding 150 tokens to raise its total holdings to 700 – about $32 million based on current pricing. The nation recently adopted Bitcoin as legal tender in a controversial move that met with technical glitches and protests. Screen for heightened risk individual and entities globally to help uncover hidden risks in business relationships and human networks.

Dogecoin, which was initially set up as a joke in 2012 before seeing its shares skyrocket, has also dropped while Solana has seen its market price rise by more than 8%. It came after the electric car company bought $1.5b (£1.06b) of Bitcoin shares, which in turn sent the market price of both the crypto and Tesla soaring. The decision has already had an impact on the global crypto market. Intraday chart signals are neutral, suggesting the current loss of momentum could continue into the Asian trading session. Buyers will need to defend immediate support around $55,000 and decisively break above the short-term downtrend in order to yield further upside targets. Former CFTC Commissioner Brian Quintenz joined “First Mover” hosts to look at the crypto regulation landscape. This comes as Quintenz joins the board of the first CFTC-regulated “events market,” Kalshi. Co-Managing Director and board member at Strategic Funds Marc Lopresti provided market insights as bitcoin dipped below $60K. Plus, Brave, the crypto-focused web browser, is adding a native wallet and will support Solana and all Ethereum virtual machine-compatible tokens.

You can see below that, since the start of September, Bitcoin, Ethereum, and Solana have been on fire, while meme coin Dogecoin seems to have lost its luster. In recent times, bitcoin, which went as high as $63,000 in April, has been hit by concerns over the environmental impact of mining it, as well as regulatory crackdowns in countries including China and the UK. This has wiped hundreds of billions from the overall market, which was worth more than $2.35tn at the start of the day. Some Reddit users even suggested that if all 3,316,862 community members were to buy $30 of bitcoin each on Thursday, $99,505,860 would be added to the cryptocurrency. The price of bitcoin has declined nearly 10% in the last 24 hours. Bitcoin’s illiquid supply copied the mood, rising significantly as prices fell in a sign of strong buyer interest throughout this week. Bitcoin fell through key support levels on Nov. 18 in a fresh test of bulls’ resolve.

“What is most worth looking out for is whether or not neighboring countries in Latin America, or those elsewhere around the world, begin to adopt bitcoin as their national currency as well,” Wald added. El Salvador President Nayib Bukele announced in a tweet that the country disabled Chivo, its government-run bitcoin wallet, to increase the capacity of the servers. From this week, businesses will be required to accept bitcoin for goods and services. Against a backdrop of El Salvador’s BTC boosts, famed investor Michael Burry warns about a crypto price bubble and China intensifies its crypto clampdown. The cryptocurrency industry is hopeful that the government will involve stakeholders while drafting the bill, he said. While the bill’s fine print is yet unknown, experts believe the panic selling of cryptocurrencies is partly reflective of their increased popularity since January when the draft bill was first announced. For more expert analysis of the biggest stories in economics, business and markets, sign up to Money Talks, our weekly newsletter.

The supply of bitcoin on exchanges continues to decline, which could indicate a preference among investors to hold BTC in wallets instead of making their coins available to trade on exchanges. “For markets, financial conditions remain incredibly accommodative by historic standards, and even as break-evens [market-based inflation expectations] have risen over the last couple of months,” Deutsche Bank wrote. Bitcoin’s novelty as an asset class means that its story is still unfolding. Its price has mostly mimicked the classic Gartner Hype Cycle of peaks due to hype about its potential and troughs of disillusionment that resulted in crashes. The cryptocurrency can be used for any transaction where the business can accept it. As in the past, Bitcoin’s price moved sideways for the next two years. For example, there was a resurgence in price and trading volume in June 2019, and the price surpassed $10,000, rekindling hopes of another rally. The cryptocurrency was hovering around the $1,000 price range at the beginning of that year. After a period of brief decline in the first two months, the price charted a remarkable ascent from $975.70 on March 25 to $20,089 on Dec. 17. The narrative surrounding Bitcoin has shifted from being a currency to a store of value as a hedge against inflation and uncertainty around the U.S. dollar’s future purchasing power.

Smaller rival ether , the coin linked to the ethereum blockchain network, fell 11.99%. Every day we publish the latest news, stories, and content on the financial topics that matter. The whiplash was likely familiar to those who owned bitcoin in 2017. In December of that year, Bitcoin hit a high of $20,000 before crashing to around $12,000 before the new year even began.

If the bill were to pass, it would effectively ban citizens in India from transacting in most cryptocurrencies. The price was around $56,800 per coin, while rivals Ethereum and Dogecoin were trading around $4,300 and 22 cents per coin, respectively, according to Coindesk. Looking beyond the support and resistance levels, we saw the 50 EMA pull away from the 100 and 200 EMAs early in the morning before narrowing. At the time of writing, Bitcoin, BTC to USD, was down by 3.02% to $51,084.0. United States regulators have always had a dysfunctional love-hate relationship with Bitcoin. Treasury Department is planning to implement a mechanism where they will become empowered to monitor the crypto-wallets of users. It didn’t help that Brian Armstrong, CEO of Coinbase, publicly tweeted his concern, triggering a flood of sell-offs. The blockchain analytics firm IntoTheBlock showed that from Nov. 25 to 26, Bitcoin whales unloaded 93,630 BTC in different exchanges. The president had pitched the idea of adopting Bitcoin as a way to bring more Salvadorans, about 70 percent of whom don’t have bank accounts, into the formal economy.

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But just because bitcoin’s price hit another record doesn’t mean it’s a good time to get in on the action. Just take a look at the previous spikes that resulted in record highs, and what happened afterwards. However, some conservative investors, including Tom Dyson, remained skeptical especially after Bitcoin surged from $190 to $266 in less than a week. It appeared that the currency’s price was becoming increasingly overvalued as a result of hoarding by speculators and short-term traders. A few saw signs of Bitcoin Exchange a massive bubble ready to burst, and some grew weary when the U.S. Treasury announced in March it would explore new laws to regulate Bitcoin. Other cryptocurrencies’ prices also sharply rose, then followed by losses of value during this period. In May 2021, the value of Dogecoin, originally created as a joke, increased to 20,000% of value in one year. In June 2018 Ella Zhang of Binance Labs, a division of the cryptocurrency exchange Binance, stated that she was hoping to see the bubble in ICOs collapse.

The drop seems to be triggered by the infrastructure bill signed by U.S. President Joe Biden yesterday, Darius Sit, co-founder of crypto trading firm QCP Capital told The Block. The bill includes tax reporting provisions that require crypto exchanges to report information to both the Internal Revenue Service and to their customers, including capital gains. But given that ether is nearing its initial support level of $4,000, Stockton thinks $58,000 may serve as reliable support for bitcoin. «There are already signs of intraday downside exhaustion per the DeMARK Indicators that suggest the worst of the pullback may be over,» Stockton said. The cryptocurrency could fall an additional 12% if it breaks below the $58,000 support level, according to Fairlead Strategies’ Katie Stockton.

The use of Bitcoin for treasury management at companies also strengthened its price in 2020. MicroStrategy Inc. and Square Inc. have both announced commitments to use Bitcoin instead of cash as part of their corporate treasuries. Recent price fluctuation has followed new regulatory actions by the U.S. government, as well as the new legislation pertaining to crypto in the infrastructure bill. In an industry as new and unproven as cryptocurrency, it doesn’t take much to drive big swings in price. More generally, new short-term investors who are selling their holdings in reaction to the latest drop may be contributing to the drop in Bitcoin’s value, according to a report from Glassnode Insights, a blockchain analysis firm. Earlier this year, previous sudden drops followed a ban on cryptocurrency transactions and mining from China’s central bank, which in September declared all cryptocurrencies illegal in the country. After previously topping $52,000 in early September, Bitcoin’s price had dropped and struggled to get back over $50,000 until October.

While many Bitcoin holders may propagate the unstoppable rise of the currency and predict near-future highs totaling hundreds of thousands of dollars, in private they might not be quite so optimistic. According to cryptocurrency analyst Joseph Young, when the funding rate fell to 0.011%, it reflected the fact that Bitcoin perpetuals were oversold following the deep price drop of around $3,000. This supports the claim of other analysts that there was, indeed, too much leverage in the market. Young adds, however, that the price of Bitcoin remained resilient at $18,000 despite the overselling. The November crash was attributed to rumored legislation that would target crypto wallets before the end of Trump’s term. However, surely this couldn’t be the sole reason for such a strong reversal, after Bitcoin brushed off the BitMEX prosecutions with barely a hiccup only weeks earlier. Read more about Dragonchain exchange here. With a lion’s share of crypto’s total market cap, BTC shouldn’t be as volatile as other less established cryptocurrencies who frequently experience so-called pump and dumps due to low liquidity.

Here, Jo noted that there is a danger zone for BTC that users have to be wary about whenever they plan to hold new positions. Ethereum, the second-largest cryptocurrency, is down by about 4.76% over the past 24 hours at $3,767, while Dogecoin is down 7.61% at $0.2882. Other cryptocurrencies, such as Ethereum and Dogecoin, also dropped on Tuesday. It came as El Salvador announced that it would be the first country to adopt the world’s largest cryptocurrency as legal tender. At the time of publication, Bitcoin prices are down 7.33% over the last 24 hours, and BTC is trading at US$32,622. Meanwhile, Ethereum has fallen 8% and Ether’s price sits at US$2,003, according to CoinMarketCap. Other standout crypto price corrections over the last week include Cardano’s ADA, Dogecoin, Ripple’s XRP and Uniswap — which have fallen 15% , 22%, 22% and 21% respectively. Ethereum also slid by over 21% over the last 7 days and is currently trading at around US$2,000, as Ether prices fell a further 8.78% in the last 24 hours. Furthermore, many people have raised their legitimate concerns about cryptocurrencies having deeper issues that might jeopardize the country’s global and macroeconomic financial stability.

According to a 2020 research based off IP addresses from so-called hashers that used certain Bitcoin mining pools, more than half of all the Bitcoin mining occurred in China. The third price hike was connected to the launch of a Bitcoin ETF in the United States. From January to February 2018, the price of Bitcoin fell 65 percent. By September 2018, the MVIS CryptoCompare Digital Assets 10 Index had lost 80 percent of its value, making the decline of the cryptocurrency market, in percentage terms, greater than the bursting of the Dot-com bubble in 2002. From 8 March to 12 March 2020, the price of Bitcoin fell by 30 percent from $8,901 to $6,206. Sam Bankman-Fried, the chief executive of FTX, one of the largest cryptocurrency exchanges, put a positive spin on the “legitimate bad news” from China, saying now is a great time for North American crypto mining to take off.

These checks further amplified concerns over inflation and a potentially weakened purchasing power of the U.S. dollar. Money printing by governments and central banks helped to bolster the narrative of Bitcoin as a store of value because its supply is capped at 21 million. This narrative began to draw interest among institutions instead of just retail investors, who were largely responsible for the run-up in price in 2017. This maturing, however, has failed to tame the wild gyrations that characterise crypto markets.