Cryptos
Bitcoin prices slip after soaring to
JACK GUEZ/AGENCE FRANCE-PRESSE/GETTY IMAGESReferenced Symbols
Bitcoin was on the brink of entering a bear market Tuesday as the volatile crypto asset suffered a double-digit plunge over the past 24-hour period.
A single bitcoin BTCUSD,
To be sure, bitcoin’s wobbles aren’t unusual but the crypto’s reputation for volatility is one reason naysayers contend it isn’t suited to serve as a medium of exchange.
Why is bitcoin’s price down?
Indeed, that was a point raised by Treasury Secretary Janet Yellen on Monday during a New York Times DealBook conference.
“To the extent it is used I fear it’s often for illicit finance. It’s an extremely inefficient way of conducting transactions, and the amount of energy that’s consumed in processing those transactions is staggering,” the former Fed chairwoman said.
Yellen’s comments have been cited as a reason for bitcoin’s recent losses. However, Yellen’s assessment of bitcoin as a inefficient medium of exchange is an important point and one that has already been raised in the past by bitcoin bulls.
Using a volatile asset in exchange for goods and services makes little sense if the asset can tumble 10% in a day, or surge 80% over the course of a two months as bitcoin has done in 2021, critics argue.
To put a finer point on it, over the past 12 months bitcoin has registered 8 corrections, defined as a decline from a recent peak of at least 10% but not more than 20%, and two bear markets, which are defined as falls of 20% or more, according to Dow Jones Market Data.
By comparison, the S&P 500 index SPX,
Some have also attributed bitcoin’s recent retrenchment to comments from newfound crypto enthusiast Elon Musk, the chief executive of electric-car maker Tesla Inc. TSLA,
Tesla shares, meanwhile, have tumbled into bear-market territory, dropping more than 20% from a Jan. 26 record close. Analysts have tied the weakness to bitcoin’s slide, with Tesla earlier this month announcing it had purchased $1.5 billion of the cryptocurrency.
Check out: Tesla stock’s drop likely related to bitcoin bet
Other theories on bitcoin’s downturn include the idea that the drop is down largely to profit-taking, with some holders taking profits near its weekend peak. that some owners have taken profits, selling bitcoin during its weekend peak.
Should I invest in bitcoin?
Many critics warn that bitcoin and other cryptos are purely speculative assets that could be regulated out of existence, knocking their price to zero.
It is just not clear what the future holds for cryptos or if bitcoin specifically will emerge as the dominant virtual asset to rule them all.
Although Yellen’s comments were credited with bringing down the price of bitcoin and its rivals, the Treasury secretary’s remarks could be ultimately viewed as constructive for digital assets in general.
She also said, during her interview with the Times, that digital payments, which the Fed and other central banks across the globe have explored, could lead to “faster, safer and cheaper payments,” which she described as important goals.
That is hardly a knock on bitcoin, but it isn’t a full-throated endorsement of the cryptocurrency or other cryptos since fiat-backed digital assets or central bank digital currencies are viewed in a different class to cryptographically backed assets.
Craig Erlam, senior market analyst at Oanda, in a Tuesday note, characterized the bitcoin pullback as a bit of hiccup and said he wouldn’t surprised to see it retake $50,000 at some point, but notes that it had been overbought and was vulnerable to a downturn.
Read: Bitcoin drops further below key $50,000 level after Yellen calls it ‘extremely inefficient’
“Bitcoin fever hasn’t gone away all of a sudden because Musk has questioned the price but his Twitter feed has certainly become a primary catalyst for the market,” Erlam wrote. “That probably won’t stop it surging back above $50,000 in the very near future and probably hitting new highs shortly after.”
He speculated that bitcoin could hit $42,000 or $40,000 before it stabilizes.
In any case, it is worth recalling that bitcoin enjoyed a parabolic surge back in December 2017, nearing $20,000 before it crashed early in the following year to a low of $3,000.
That low likely crushed new investors who bought into the asset for fear of missing out, or FOMO, but long-term owners or “HODL”-ers, who hold on to their bitcoin through thick and thin, were still enjoying monster gains.
Yves Lamoureux, president of macroeconomic research firm Lamoureux & Co., told MarketWatch that average investors need to be particular cautious in bitcoin and cryptos.
“Bitcoin offers the same predictable pattern,” he said. “Nobody wants it until we go parabolic…then most [people] get decimated,” Lamoureux said.
In the end, bitcoin buyers should beware.
Why has bitcoin risen sharply over the past year?
The recent run-up in bitcoin to a market value exceeding $1 trillion on Friday has more broadly been tied to institutions becoming more involved in the asset.
Those include PayPal Holdings Inc. PYPL, which back in November opened up its cryptocurrency platform to all U.S. customers after conducting a more narrow rollout, has helped drive bitcoin prices sharply higher in recent weeks and months.
More recently, Musk’s Tesla announced that it had acquired $1.5 billion in bitcoins in January and that it could accept the world’s No. 1 digital asset for payment in the future, helping to deliver a fillip to crypto assets broadly.
Bitcoin Tumbles Below $50,000; Cathie Wood Eyes the Dip
(Bloomberg) -- Bitcoin’s losses accelerated, with prices tumbling below $50,000, as investors started to bail on the market’s frothiest assets.
The cryptocurrency tanked as much 18% on Tuesday and traded around $48,000 as of 5:35 p.m. in New York. While the selloff only puts Bitcoin prices at the lowest in about two weeks, investors are starting to wonder whether it marks the start of a bigger retreat from crypto or simply represents volatility in an unpredictable market.
“We advise clients to practice caution with crypto speculation,” UBS Global Wealth Management Chief Investment Officer Mark Haefele said in a statement. “Alongside unresolved regulatory risks, the future usage case remains unclear.”’
After more than doubling since December, Bitcoin swooned this week with the high-flying stocks that have been among the best performers over the past year as a selloff in the momentum trade accelerated. While tech-heavy equity benchmarks like the Nasdaq 100 almost climbed back into positive territory Tuesday, Bitcoin continued to linger near the lows of the day.
Some high-profile Bitcoin backers said it’s worth taking advantage of the decline to buy more.
“We’re very positive on Bitcoin, very happy to see a healthy correction here, no market is straight up,” Ark Investment Management’s Cathie Wood said in a Bloomberg interview. She didn’t disclose whether Ark made a purchase.
Elon Musk’s comments over the weekend saying the prices of Bitcoin and Ether “seem high” were viewed as the initial catalyst for the selloff. Musk had helped trigger the rally when his Tesla Inc. disclosed on Feb. 8 that it had added $1.5 billion in Bitcoin to its balance sheet. Tesla shares fell for a fourth day.
Square Inc. said Tuesday that it bought about $170 million in Bitcoin. Combined with the payment company’s previous purchase of $50 million, Bitcoin represents about 5% of its total cash, cash equivalents and marketable securities as of Dec. 31.
“It’s a pure speculative asset,” said Nader Naeimi, head of dynamic markets at AMP Capital Investors in Sydney.
Meanwhile, the crypto exchange Bitfinex settled a probe with New York Attorney General Letitia James over allegations that it hid the loss of commingled client and corporate funds and lied about reserves. Some market participants saying that the agreement, which included $18.5 million in penalties, lifts a cloud over the cryptocurrency market.
“On the grand scale of things, it’s less than a speeding ticket,” said Antoni Trenchev, managing partner and co-founder of Nexo in London, a crypto lenders. “I’m just excited that they will be revealing more numbers so that we can accurately assess and hopefully that will create some comfort for the market participants.”
(A prior version of the story corrected the headline, second deck and seventh paragraph to clarify Wood did not say she bought Bitcoin.)
Bitcoin extends its slide, tumbling below $50,000
- Bitcoin resumed its slide on Tuesday, tumbling as low as $45,041.
- Treasury Secretary Janet Yellen called bitcoin “extremely inefficient” and warned about its use in illicit activity.
- After hitting $1 trillion in market value for the first time last week, bitcoin is now worth less than $900 billion.
Bitcoin’s price descended further on Tuesday as U.S. Treasury Secretary Janet Yellen and Tesla CEO Elon Musk weighed in on the cryptocurrency’s recent rally.
The world’s most valuable digital coin plunged 11% in 24 hours, sinking below $50,000 to trade around $48,080 at 11:30 a.m. ET, according to data from Coin Metrics. It had earlier fallen as much as 16% to hit an intraday low of $45,041.
Smaller digital tokens like ether and XRP also tumbled. Ether slipped 11% to $1,573, while XRP sank 17% to trade around 47 cents.
Yellen on Monday called bitcoin an “extremely inefficient way of conducting transactions” and warned about its use in illicit activity. She also sounded the alarm about bitcoin’s impact on the environment. The token’s wild surge has reminded some critics of the sheer level of electricity required to produce new coins.
Bitcoin isn’t controlled by any central authority. So-called miners run high-power machines that compete to solve complex math puzzles in order to make a transaction go through. Bitcoin’s network consumes more electricity than Pakistan, according to an online tool from researchers at Cambridge University.
Yellen also warned about the risks for retail investors buying bitcoin.
“It is a highly speculative asset and you know I think people should be aware it can be extremely volatile and I do worry about potential losses that investors can suffer,” the former Federal Reserve chair told CNBC’s Andrew Ross Sorkin at a New York Times DealBook conference.
Bitcoin is still up more than 360% in the last 12 months and around 60% since the start of the year, and price swings of more than 10% aren’t a rarity in crypto markets. Bitcoin once climbed to almost $20,000 in 2017 before shedding 80% of its value the following year.
The digital coin hit $1 trillion in market value for the first time last week — though it has now sunk below $900 billion, according to CoinDesk. It has gotten a boost from news of Wall Street banks and large companies like Tesla and Mastercard warming to cryptocurrencies.
Tesla’s Musk said over the weekend that the prices of bitcoin and ether “seem high.” His comments came after Tesla’s announcement earlier this month that it had bought $1.5 billion worth of bitcoin. Tesla shares on Monday suffered their biggest fall since Sept. 23.
“It’s a virtual forest fire,” said Glen Goodman, a U.K.-based trader. “The wood was bone-dry and waiting for a spark. Elon Musk was that spark.”
“Crypto futures traders were borrowing so much money to buy Bitcoin contracts, they caused borrowing rates to skyrocket,” Goodman added. “By Saturday 20th Feb, they were paying 144% per annum. Clearly that situation couldn’t continue. In those conditions, prices have to fall to shake out the over-optimistic borrowers and return borrowing rates to normal levels.”
Bitcoin has been getting traction from mainstream investors, in part because of the perception that it’s a store of value similar to gold. Bullish investors claim the cryptocurrency can act as a hedge against rising inflation.
But skeptics warn that bitcoin has no intrinsic value and is one of the biggest market bubbles in history. Analysts at JPMorgan last week said bitcoin was an “economic side show” and that crypto assets rank as the “poorest hedge” against significant declines in stocks.
TIPS & TRICKS
BITCOIN AGAIN COMES AND TODAY IT IS AT $50,000 AND 'The best time to invest in bitcoin was yesterday,’ says strategist as the cryptocurrency soars. I SAID TO you invest yesterday as it was less than today you will be profit and if you have invest in wrapped bitcoin you would have no tension and no loss only profit.
IF YOU ARE NOOB AT CRYPTO TRADING BUT WARN TO LEARN IT AND EARN PROFIT THEN CLICK BELOW TO TAKE CLASSES
This is dummy text. It is not meant to be read. Accordingly, it is difficult to figure out when to end it. But then, this is dummy text. It is not meant to be read. Period.
If You Have Any Doubts. Please Let Me Know ConversionConversion EmoticonEmoticon