Bitcoin’s rise comes to a halt with major week selloff
Bitcoin’s meteoric rally was brought to an abrupt halt this week with its worst weekly slide in almost a year coming amid broader losses in risk assets. The digital token plummeted by as much as 21% this week.
The decline in Bitcoin price is symptomatic of general turmoil in global markets. Concerns about increasing growth and inflation reinforced by rising bond yields push traders to reevaluate their positions across multiple asset classes.
The heavily technology-oriented, Nasdaq 100’s last sessions went down as the index was affected by declines in stocks such as Tesla and Peloton Interactive. Risk-on-assets are currently heavily affected and with the dollar strengthening, analysts expect that drops in Bitcoin and cryptocurrencies will follow.
Massive selling of the cryptocurrency in the Grayscale Bitcoin Trust as investors rushed to cash in their gains leaving the trust with losses reaching up to 20% this week, and the expiry of Bitcoin options also contributed to the token’s high volatility.
Bitcoin supporters’ claims that the digital token retains store of value and can serve as hedge protection against inflation may have driven its fivefold rally, but are under heavy scrutiny after the token’s evident weakness against market changes. Critics see Bitcoin’s surge as a speculative bubble headed towards a similar fate as its 2017 rise and fall.
Bitcoin dubbed the new “digital gold”, is often likened to the precious metal that is currently holding its value, with an approximate 1.1% drop since last week. The dollar is strengthening and is on its way to its strongest gain in a month during this period.
Earlier comments by Elon Musk that cryptocurrency prices “seem high”, Gates’ comments that he’s not a fan of Bitcoin, and Treasury Secretary Janet Yellen saying that the token was an “extremely inefficient way of conducting transactions” may been catalysts for this week’s major selloff.
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