Bitcoin is falling as purchases slow and USD recovers
August 26, 2020
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Bitcoin lost nearly 5% during last week’s trading, while rest of top ten Altcoins lost…
Bitcoin is falling hard to lose about 12%, to trade above $30,000
Bitcoin plunged strongly today, Thursday, to lose about 12% of its value, surpassing critical support levels, targeting the level of $ 30,000 amid prospects for further decline, and this has eliminated nearly $ 180 billion from the market value since a record high on January 8.
The decline coincides with mounting bearish calls from analysts and regulators after a massive rally over several months fueled by institutional adoption which is still booming.
Reasons for the significant drop in the Bitcoin price
The sell-off occurred despite the positive risk sentiment driving traditional markets, prompting analysts to blame a series of fundamentals, from US Treasury Secretary Janet Yellen’s comments about using Bitcoin for illicit purposes to a Deutsche Bank survey that concluded That digital currency appears in a huge bubble.
When asked about the fate of Bitcoin and Tesla shares after the big rallies over the past year, the bank said in its report, many argue that it is likely that both will decline to half their current value, and if Tesla shares will be weaker than that, overturning those pessimistic fundamentals The short-term bullish tendency of the digital currency to be bearish.
Analysts said the continuing losses come as the increasing adoption of mainstream bitcoin increases correlations with cyclical assets, which could shift digital currencies from insurance to leverage.
Analysts have gone on to say that the leading cryptocurrency is the least reliable hedge during periods of severe market stress, an observation that contrasts starkly with Wall Street experts who argue that investors are flocking to the world’s largest cryptocurrency as a “legitimate hedge against inflation.”
The market remains optimistic
Nevertheless, the market appeared optimistic to retreat from levels around $ 30,000, two weeks ago the price floor had passed the bears’ control of bearish correction sentiment after Bitcoin reversed its direction on the rally to a record high near $ 42,000.
Part of the bullish sentiment dominating the market comes from cues from growing accumulation sentiment. Additionally, Grayscale Investments, a New York-based investment firm, purchased 16,244 Bitcoins worth more than $ 600 million per day, bringing its net reserves of digital currency more. Of the 63,000 tokens valued at around $ 23 billion, many analysts agree their buying spree will offset the downside risks of the cryptocurrency in the long run.
Meanwhile, analysts are also optimistic about BlackRock’s recent submission of papers to the US Securities and Exchange Commission on investing in Bitcoin futures contracts, and the company, which manages $ 8.7 trillion in assets, said two of its funds plan to invest in Bitcoin futures.
This indicates that BlackRock understands the value of the digital currency, as they manage the equivalent of 8% of global GDP compared to Bitcoin, which represents about 0.6% of global GDP.
Professional Trader and Analyst, economist in Financial and Forex market since 2004.holds an MBA from the American University in Egypt. Mohammed works as an economic writer and technical & fundamental analyst for many international Forex and financial trading companies in both English and Arabic on a daily basis.
