The price of Bitcoin once reached an all-time high of up to $60,782 in mid-April 2021, but after that, the price of Bitcoin plunged to reach $32,792 on June 8, 2021, why Bitcoin drops?
Just need two months later the price of Bitcoin fell very deeply even reaching 50% in just a span of two months. Maybe Bitcoin investors that holding this asset will felt a socking due to a decline in the asset’s value. But what is the reason that Bitcoin and other altcoins have fallen so sharply? Is it still possible when the price of Bitcoin will go up again?
Cryptocurrency enthusiasts certainly have these important questions to see the future of Bitcoin and cryptocurrencies in general.
- 1 What are Bitcoin drops?
- 2 The reason why Bitcoin drops?
- 3 When bitcoin drops what goes up?
- 4 Why do altcoins drop when bitcoin drops?
- 5 Final thought
What are Bitcoin drops?
Bitcoin drops are events when the high value of Bitcoin then quickly drops to a low price in a short period of time. These drops can also occur in daily, weekly, or monthly time frames. On the daily time frame, Bitcoin drops drop less than 10% on average. But when conditions are beyond forecast, it is because there is an extraordinary event that causes traders to sell Bitcoin.
Significant Bitcoin sales can cause the price to drop to the point of oversold by the market reaction. When the value of Bitcoin drops, the panic factor can encourage BTC holders to sell their coins for security reasons.
Even though Bitcoin is made in limited quantities, only 21 million BTC will be circulated to the public, but historically the value of Bitcoin is more influenced by the level of supply and demand. The high demand has caused the Bitcoin value to rise, and the falling demand and Bitcoin sell-off caused the Bitcoin value to drop.
Due to its fluctuating value, Bitcoin is more suitable as an asset than as a currency. While this may be a means of payment, it may only be suitable in certain industries.
Bitcoin price drops history
In its history, the Bitcoin price has experienced several historical price conditions. Since the launch of Bitcoin in 2009, the price of 1 BTC is still very low. Even in 2010, two Pizzas were bought for 10,000 Bitcoins. Imagine if you have 10 thousand BTC at this time, not only Pizza you can buy, even luxury cars you will get.
Bitcoin prices began to rise after 2012, at which time Bitcoin miners began to appear to get Bitcoin rewards. Also, traders have started getting to know Bitcoin and making it more and more popular.
Mt. Gox, a Japanese company that previously focused on trading card games, also entered the Bitcoin trading exchange in 2014.
The popularity of Bitcoin is getting higher until it reaches its peak price in 2017 at the end of the year, Bitcoin’s price reaches $20,000.
But in early 2018 the price of Bitcoin fell and several analysts had previously warned about a Bitcoin bubble that could burst at any time. And it seems that this event will repeat itself in April 2021, after scoring a new high of $64,000 the price then dropped and reached $32,000 in just two months.
Bitcoin drops below 40K
Bitcoin price reached $40,000 in early January 2021 and peaked on April 14, 2021, where it reached $64,000. As Bitcoin’s significant decline, the price fell below $40K reached on May 19, 2021, where the price dropped to a low of $30,000.
After the drop at $30K the price tried to rise again but didn’t manage to break through the $40K price, the price fell again until today it fell to $32K. It seems that the $30K figure becomes a support zone where if the zone is successful there is a break, the price can drop further below $30K.
If Bitcoin drops will Ethereum goes up?
Ethereum is the second generation blockchain after Bitcoin, the Ethereum platform can be a platform for Dapps projects built on top of it. The emergence of Ethereum is a solution to the problems that occur on the Bitcoin blockchain.
Ethereum is a blockchain that uses smart contracts using Proof of Stake consensus, which is considered to be faster to validating a transaction instead of Bitcoin.
But does that mean that if the price of Bitcoin drops, the price of Ethereum will go up?
Comparing the historical charts of BTC and ETH prices, this is not the case. Often the two cryptocurrencies are positively correlated, where if BTC drops then ETH will also drop. There is indeed a small wave where the price of ETH goes up while BTC drops.
But overall the prices for both, in the long run, are similar in price patterns.
The reason why Bitcoin drops?
The price of Bitcoin fell to the level of $32K making fans wonder the reason that had made the price of Bitcoin drop.
There are various reasons that cause the price of Bitcoin to drop. One of the reasons is the threat of decreasing institutional support due to its relation to regulatory concerns. Large institutions that have funds for investment have a high influence on Bitcoin prices. If the investor withdraws support from Bitcoin or other cryptocurrencies, it could result in a decrease in the value of Bitcoin.
Another possible reason for the price of Bitcoin to drop is that the price has reached its highest point and many investors are making a profit. This action can encourage other Bitcoin holders to release Bitcoin and store it in the wallet and get profits from buying low and selling high. The more Bitcoin holders sell BTC, the more the BTC price drops.
Another reason that Bitcoin drops is the bad effect Bitcoin mining has on the environment. Because it leaves a carbon footprint that can damage the environment.
Bitcoin drops because of Elon musk
Elon Musk is one of the reasons for the Bitcoin price to drop in 2021. Previously, Elon Musk announced that Tesla accepts Bitcoin for vehicle purchases from Tesla Motor. He also supports Dogecoin which causes Doge’s value to increase sharply because many of his followers buy DOGE as a result the price goes up.
But recently Elon Musk announced that Tesla Motor was suspending payments with Bitcoin on their vehicles. The reason is the negative impact on the environment due to Bitcoin mining. However, some analysts speculate that what Musk is doing it for business interests, where he previously bought up large amounts of Bitcoin. And because the price went down they sold it back.
Bitcoin drops due to China
China is the toughest country on the cryptocurrency market, the government prohibits all Chinese banks from using cryptocurrencies or exchanging fiat currency for cryptocurrencies.
President Xi Jinping recently announced a ban on cryptocurrencies in his country on the grounds that it could undermine the stability of the national financial system.
The ban has the support of three Chinese financial industry groups. These include the China National Internet Finance Association, the China Banking Association, and the China Clearing and Payments Association. Thus, financial institutions including banks, online payment channels, may not offer any services involving cryptocurrencies such as bitcoin and so on, from registration, trading, clearing, and settlement.
Even though China is a large cryptocurrency user, so the ban could lead to a decrease in Crypto prices. As a result of the ban, a source said Chinese traders were looking for a solution by trading Crypto to Crypto for example with the USDT stablecoin.
When bitcoin drops what goes up?
Bitcoin’s market cap has reached over $614 billion by the middle of 2021. But this year after reaching it’s high, Bitcoin price had to fall again, more than 50%.
So what assets might rise when the Bitcoin price drops?
Market sentiment always forms its own pattern, when the price of Bitcoin falls, it gives a signal that there has been a large amount of Bitcoin selling. So where did the funds go?
Usually, investors will look for safer assets, maybe they are looking for stocks whose value is undervalued. Or choose securities that are relatively safe in the long term.
Another alternative is gold, if you look at the correlation since 2020 when Bitcoin prices rise, gold prices tend to fall, and vice versa, when Bitcoin drops gold prices tend to rise.
But the increase in gold prices is not solely due to the price of Bitcoin drops. The weakening of the USD is also the reason for rising gold prices.
Why do altcoins drop when bitcoin drops?
Crypto investors or traders, may already understand the correlation between Bitcoin and other cryptocurrencies, or better known as altcoins.
Often when the price of Bitcoin drops, other cryptocurrencies also drop, conversely when the price of Bitcoin goes up, other cryptocurrencies follow the rise.
But what is the right reason to illustrate why when Bitcoin drops, other altcoins also drop?
Perhaps the most reasonable answer is, Bitcoin, known as the mother altcoin, is the cryptocurrency on which the exchange is based.
This means that before an altcoin is converted to USD, it must first be converted to Bitcoin. That condition is the reason when the Bitcoin price goes up, altcoins also go up because of the crypto to crypto correlation. So for example in stocks, if global conditions are bad, stock prices mostly drop.
Indeed, sometimes one altcoin goes up but Bitcoin goes down. This condition is because investors push altcoins to rise, but usually, it is only in the short term.
BTCUSD trading analysis June 2021
BTCUSD, at press time, is at $32,554. continued the decline in the previous period, with a decrease of -5%. By drawing a trendline, where the $30,000 price level is the closest support value. This area can be the key to the next movement based on technical analysis.
The key concern is the price of $30K, if this level breaks out, it allows the price to drop lower could reach $27K even more than $25K. But pay attention to the Bollinger band indicator, it has indicated low volatility been starting.
The upper and lower bands seem to be squeezing by starting to narrow. This condition will wait for market sentiment to begin to expand.
Meanwhile, the RSI indicator, shows level 28, meaning the market has not yet reached the oversold rule based on the RSI set at level 20. This still allows the price to continue to bearish further.
Looking at the fundamentals, Bitcoin and cryptocurrencies are currently under pressure, where China, a country that prohibits cryptocurrencies, will take action against all crypto-related activities, including banning Bitcoin mining in its territory.
These conditions can affect the fall in the value of Bitcoin. On the bright side blockchain is still thriving with new projects, even the president of El Salvador is planning to legislate to legalize Bitcoin as a recognized payment system.
ETHUSD trading analysis June 2021
ETHUSD formed a new high on May 12, 2021, at the price level of $4384, after which the price moved downwards and reached a low of $1728 on May 23, 2021. Currently, ETHUSD is down -8% from its open price and is perched at $2388.
The price of ETH experienced similar conditions to Bitcoin, the price fell near the lower band which began to narrow or squeeze. The middle band which is the moving average shows the price trend is bearish because the price is below the middle band line.
The narrowing of the Bollinger bands indicates weak volatility. While the RSI at level 41 is an indication of a bearish trend and has not yet reached the oversold point.
The $2000 price level is important for ETHUSD, it is supported in round number theory. There is a crucial level for the breakout. If there is a possible breakout, it will look for the target of $1728 which became the low of the May 23 period.
DOGEUSD trading analysis June 2021
Dogecoin started popping up when Elon Musk tweeted about Dogecoin. On the Tradingview platform, the new price history starts on May 5, 2021.
The price of Dogecoin suffered the same fate as BTC and ETH, it was down -6% on the day of writing and landed at $0.311740. Because Tradingview chart price data only started a month ago, there is not enough data if you use the daily timeframe. Therefore, we use the H4 timeframe to analysist.
It appears that the BB line began to expand on the DOGEUSD pair after it squeezed on May 17th. The price started to break the lower band as an indication of a downward trend.
However, seeing the RSI indicator pointing to level 26, signals that oversold is starting to enter the zone. Although DOGEUSD is still likely to fall further, the RSI is giving an early warning of a possible reversal. Although DOGEUSD is still likely to fall further, the RSI is giving an early warning of a possible reversal.
Bitcoin drops at this time may only be temporary, although currently facing challenges related to regulation, Bitcoin is still a lot of investors who believe in the functions and advantages of Bitcoin. This is the grassroots polemic Bitcoin can survive and repeat its own history.
This article is only for information and not as investment advice, all trading consequences are the responsibility of each individual.
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