Bitcoin falls almost 20% in two weeks as crypto bulls retreat
China’s crypto crackdown and new US tax-reporting provisions that are being viewed as unfriendly to crypto investors have soured sentiment
Bitcoin has lost almost 20% in less than two weeks, proving that extreme volatility remains a hallmark of crypto investing.
Yet in the world of bitcoin, it’s largely business as usual with bullish conviction intact — in contrast to traditional markets where moves on this scale are met with alarm. The largest cryptocurrency slipped 0.5% to about $57,280 in early London trading on Friday, a sixth day of declines.
“Bitcoin correction is not a big deal,” wrote Craig Erlam, senior market analyst at Oanda. While a break to $50,000 “would represent a large correction from the highs, it would still be relatively minor considering how far it’s come in recent months.”
Some analysts say a sharp pullback is normal after prices skyrocketed 40% in October. China’s crypto crackdown and new US tax-reporting provisions that are being viewed as unfriendly to crypto investors have also soured sentiment.
“During the 2016/17 bitcoin winter, the thing that really took the wind out of the sails of crypto was when interest rates rose and liquidity was draining from the system,” said Jamie Cox, a financial adviser and managing partner at Harris Financial Group.
Price swings of 20% or more aren’t uncommon among cryptocurrencies. After hitting a record of almost $65,000 in early April, bitcoin slumped more than 50% by late June before turning higher again. After hitting nearly $53,000 in early September, it retreated about 25% over the next couple of weeks.
Aficionados of digital assets are used to big swings and often undaunted by pullbacks. They often view bitcoin as a modern day store of value and inflation hedge, though such arguments are controversial.
“When we see a big move, we take a step back and say, has anything fundamentally changed? Has there been a material event or development, or is it driven by flows and transitory sentiment?” said Hunter Horsley, CEO of Bitwise.
“This move looks like the latter,” Horsley added. “When we look at the fundamental thesis and drivers of the space, they continue to look incredibly optimistic.”
Bloomberg. More stories like this are available on bloomberg.com
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