Bitcoin crashed below the psychological $50,000 per bitcoin level for the first time since early March, losing 10% in the past 24 hours and extending its weekly losses to around 20%. Bitcoin dropped to as low as $48,780 on Luxembourg-based Bitstamp exchange before rebounding a bit.
Some reports said the bitcoin selloff, which also dumped major cryptocurrencies such as Ethereum, Ripple’s XRP and Cardano, wiped out $200 billion of the cryptocurrency’s combined $2 trillion market capitalization, due to speculation that US President Joe Biden’s plan to increase capital gains taxes may be possible. Reduce investment in cryptocurrency but follow multiple warnings in recent days, that the broader cryptocurrency market may be heading for a correction.
As market watchers of bitcoin and cryptocurrency eye the price charts anxiously, Scott Miner, chief investment officer at Guggenheim Partners (and the long-term bitcoin bull) warns that bitcoin is “too frothy” and may be about to experience a “major correction.”
“I think we could pull back to $20,000 to $30,000 on bitcoin, which is a 50% drop, but the interesting thing about bitcoin is that we’ve seen these kinds of drops before,” Minerd said. CNBC.
After the massive rise of bitcoin in 2017, the price of bitcoin fell sharply during 2018, losing nearly 90% of its value before rebounding in 2020. The price of bitcoin doubled in the first three months of 2021, rising to about $65,000 this The month in which the Coinbase IPO mania sparked a surge of interest in cryptocurrencies.
Prior to this latest move down, the sudden selloff that wiped out $300 billion of the combined cryptocurrency market value this past weekend sent bitcoin traders and investors reeling.
However, Minerd said he believes that this week’s drop is part of a “natural evolution in a long-term bull market” and expects Bitcoin to eventually rebound beyond its recent high – and likely rise to more than 400K dollar.
Bitcoin bulls point to the emergence of long-awaited institutional adoption and sudden interest from companies eager to add bitcoin to their balance sheets as driving the latest bull run, with other tokens bolstered by the burgeoning decentralized finance (DeFi) market built on top of blockchain networks like ethereum.
Some of these other major cryptocurrencies, many of which have outperformed bitcoin over the past 12 months, have fallen significantly more than bitcoin during the current sell-off.
Ethereum, the second largest cryptocurrency after Bitcoin, has lost about 10% in the past 24 hours. The price of Ethereum reached an all-time high of more than $2,500 per Ether this week before giving up its recent gains. Cardano, an Ethereum competitor that has seen its ADA token rise in price in recent months, is down 12% in the past 24 hours and is down just over 25% from its highs.
XRP, the top five cryptocurrency by value controlled by the embattled Ripple, is down 20%, adding to losses by 40% in the past week.
Dogecoin, the meme-based cryptocurrency and “joking” bitcoin competitor that has climbed into the top five cryptocurrency positions over the past two months as pump-and-dump groups attempt to push the price up, is down 25% from yesterday.
Despite the recent drop in the price of bitcoin and cryptocurrencies, those in the crypto community remain optimistic, noting the technological and institutional advances that bitcoin and cryptocurrency have made over the past two years.
“Any comparison with the crypto winter of 2018 contrasts with the incredible growth of the digital token ecosystem,” Paolo Ardoino, chief technology officer of Bitcoin and cryptocurrency exchange Bitfinex, said in an email comment.
“While this ratio may be the same as it was several years ago, the quantitative technological leap that has occurred – in terms of market structure and advances in different protocols – may make today qualitatively different.”