The question on everyone’s mind is why Bitcoin prices dropped. From July 27 until the beginning of September, Bitcoin was around $10,000 in worth. Now, it’s plunged below that mark. Of course, there are plenty of reasons this might be, and we take a look at the most probable ones.
Clearly, many things are going on with the economy right now. Small businesses are closing their doors because they’re forced to do so. More people now than ever before are losing their jobs, especially if they aren’t considered ‘essential.’ There was even a stimulus package sent out to most people to help boost the economy. With all that going on, investors are more careful and may not put any money into Bitcoin. You can read more about bitcoins here invisioncommunity.co.uk
Still, we wonder how that could be. Since there’s a shortage of money in the U.S., you might think that Bitcoin and other cryptos are the top options now. However, it’s still risky to invest, so people are backing off.
It’s a Bear Market
Markets tend to go in waves. Sometimes, it’s a bear market where prices fall, and people sell out. Other times, it’s the bull market, where prices soar, and people hold onto their assets. When the price started falling, it got people’s attention, so they started selling. However, there aren’t as many options to sell with cryptocurrency, making it tough to find buyers. Since it’s still a niche market, it’s a little more challenging to do.
Cryptocurrencies, in general, have short-term time-frames. It’s easier and faster to trade Bitcoin, and it’s less regulated. Those factors make it more lucrative but can also lead to significant losses, which is what happened here.
Up and Down Markets
There’s always sure to be some resistance when it comes to tradable assets. Before the surge that took Bitcoin over $10,000 back in July, there were three other times where it went above $10,000. Once it did that, it dropped below the $10,000 mark, though not as much as recently. Therefore, you could conclude that the resistance level stops around $10,000.
It’s Not Just Bitcoin
You’ve got to think about all the markets here. When you do that, you see that gold fell while the U.S. dollar soared. Investor confidence in the euro dropped, which made people cautious. We feel that helped slump the gold levels. S&P 500 also declined, though this might be coincidental because the drop came after big tech companies sold off.
What’s Next for the Price of Bitcoin
Usually, Bitcoin has a 30-day moving average of around $11,200. However, with the current Bitcoin prices far below that mark, it indicates the bear market is still going strong for this cryptocurrency. While there was a little support at the $10,000 mark, we’re still waiting for that second dip. It’s important to focus primarily right now on the stimulus package reports and monetary policies right now.
In a sense, that two-month surge in Bitcoin prices was driven primarily by the new money supply. This also applies to the stock market and other assets. Since that money is, effectively, gone and already out, things need to improve in the economy before any stocks, bonds, and cryptocurrency can reach their respective before-slump averages again.
NOTE: As with any investments you may wish to check with a financial advisor.