Bitcoin volatility continued this week, as prices remained below $50,000. During the weekend, the cryptocurrency’s trading price went down by more than 17% within 24 hours. As of December 6, the price of a single bitcoin is now $49,275.40.
Bitcoin Volatility Showed Up During The Weekend
During the weekend, the cryptocurrency struggled to return above the $50,000 barrier. Last Saturday, the price dropped to $43,000. This is a steep fall from its $57,000 trading price the day before.
Friday marked a somber mood in the broader market. Investors initiated a broad sell-off amid fears about the Omicron variant of COVID-19. Many feared that Omicron could potentially set back any economic efforts in the US economy.
As a result, all three major indices closed Friday in the loss column. Investors abandoned equities in favor of defensive stocks. The selloff also includes lower yields on the 10-year US Treasury bonds.
Bitcoin Volatility Followed Stock Market
Besides the dropoff in bitcoin prices, the broader market also underwent a selloff. The Nasdaq Composite registered lower than the Dow and S&P 500 on Friday.
Technology stocks especially got it bad before the markets closed for the weekend. Once Wall Street closed, investors turned their ire on cryptocurrencies. In fact, there are no fundamental reasons for the drop in cryptocurrency prices.
Matt Maley, an equity strategist at Miller Tabak, offered an explanation. “It looks like somebody likely got hit with a margin call yesterday and thus was ‘forced’ to sell.
The Bitcoin market tends to be much more “thin” on the weekends so that probably exacerbated the decline. Once the dust had settled, the buyer came back in and it stabilized,” he said.
Bear Market Since November 26
The weekend’s bitcoin volatility actually started a few days earlier. Cryptocurrency entered bear market volatility during the last week of November.
That day marked the drop of Bitcoin to a seven-year low of $54,000. Maley said that Bitcoin’s stabilization last Sunday under $50,000 is great news.
It’s below the trend line from the dip experienced last July. “Whether it regains that level or not next week (once regular trading activity resumes) should be important to Bitcoin,” he said.
However, Bitcoin remains well below the all-time high of $69,000. Currently, the cryptocurrency is trading around 30% lower.
Ed Moya, Oanda’s senior market analyst, says the prices will stay at the 50-60 thousand level for a while. “Bitcoin is in ‘no man’s land’ right now and that does not seem to be changing anytime soon.
The long-term bullish case remains intact but prices seem poised to consolidate between $52,000 and $60,000,” he said.
Other Cryptocurrencies Also Stabilized Sunday
With Bitcoin volatility seeming to ease off, other cryptocurrencies also began stabilizing. Ether went up by 1.5% Sunday to close at $41,76. The day before, Ether hit a low of around $3,500 after plunging 16% the Friday before.
Ether is the world’s second most valuable cryptocurrency behind Bitcoin. Experts estimate the total value of the cryptocurrency market at $3 trillion.
Watch the DataDash video reporting that Bitcoin drops by 26%. Is it time for caution?
What do you think about Bitcoin’s plunge to below $50,000? Do you think this is the beginning of the end for Bitcoin, or is this a temporary market reaction?
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