The cryptocurrency market is volatile. Crypto coins can decrease in value as quickly as they can increase. Bitcoin is the most valuable cryptocurrency in the world that some believe could become a global reserve currency. But over the last several months, it’s fluctuated a great deal.
When compared to its all-time high, Bitcoin is currently trading at roughly 50 percent. The decline in cryptos like Bitcoin mirrors the decline in stocks that have been falling since the beginning of 2022.
“The thing with bitcoin is that when it begins to fall, the price action drops like there is no tomorrow,” Naeem Aslam, chief market analyst at AvaTrade, stated in a note to clients.
He also pointed out that the month of January usually tends to be a very volatile month for cryptocurrencies. Russia, which is one of the leading Bitcoin miners in the world, is presently looking to ban the mining of digital currencies. Aslam believes it may also be contributing to the decline of bitcoin.
In November, Bitcoin hit a peak of above $68,700. Since then, it has been on a downslide. At present, it is trading at around $34,550. Investors were hoping that the price would find resistance at the $35,000 level and bounce back.
In an interview with CNBC, Vijay Aiyyar, the vice president of corporate development and international expansion at Luno, a global cryptocurrency company, said that Bitcoin will soon test the $30,000 to $32,000 level. If the $30,000 level holds for at least a week, a base could be formed and the market could eventually head higher.
However, John Roque of 22V Research believes Bitcoin could fall even more. He points out that the median historical bear market for Bitcoin is around 78 percent. Since Bitcoin is roughly 50 percent from its high, there is space for the digital currency to fall further.
“It’s possible that macroeconomic concerns, such as the Fed’s response to inflation rates, have facilitated more de-risking activity in general… The recent price drop, coupled with high volatility, could be leading to further selling as participants look to reduce risk,” Juthica Chou, head of OTC options trading at Kraken, told the media outlet.