The week is off to a bearish start for cryptocurrency as the price of Bitcoin fell nearly $10,000 from its Friday high of nearly $42,000, temporarily ending an unprecedented rally. Newbies
Known for its volatility, Bitcoin (BTC) recently fell more than $11,000 over a four-day period after weeks of soaring price action. Amid a fresh bull cycle, Bitcoin has likely picked up its fair share of new buyers — some of whom may not be familiar with the asset’s wild price swings, according to comments from Cheds, a crypto trader and analyst on Twitter. Cheds holds a level I CMT certification — a benchmark showing technical analysis knowledge.
“Given the recent surge in popularity of Bitcoin, we have many new investors and traders who have not been through any shock events, like that $8,500 daily range candle we just had,” Cheds told Cointelegraph.
Bitcoin surpassed its 2017 all-time price high in December 2020. In the following weeks, the asset doubled its former high near $20,000, tapping just shy of $42,000 on Jan. 8, based on TradingView.com data. This is likely due in part to big players from traditional finance buying Bitcoin in the second half of 2020. Metrics from crypto data site The Tie suggest a recent flow of retail money may be a contributing factor as well.
“The true believers and really anyone who understands the supply/demand imbalance loves these volatility events, because it allows them to re-enter or add on to previous positions,” Cheds explained.
“As institutional accumulation continues to increase and the daily active trading float continues to decrease, the upwards bias for Bitcoin should continue, and, in my views, all dips should be accumulated.”
Other industry participants have noted that Bitcoin dips are common, and are pointing to the recent correction to help guide expectations.
While Bitcoin’s latest price tumble is dramatic in percentage terms, it is well shy of the wipeout that occurred last spring at the outset of the pandemic. In March, the digital currency fell nearly 60% to a low of around $3,800.
This week’s price collapse is also just the latest in Bitcoin’s long history of crashes, which have defined the currency since it launched in 2009. Other notable setbacks include a fall from $29 to $2 in 2011, and the popping of the 2017 bubble, which saw Bitcoin bottom out near $3,000 after hitting a then-record high of nearly $20,000.
Although Bitcoin has historically been synonymous with sizable price swings, its advancements past $20,000 have opened the door for higher dollar oscillations.
