Following the bitcoin flash crash on Monday which wiped out over $200 billion from the crypto market, almost all cryptocurrencies continue to be on a downward trend with no signs of recovery yet.
Bitcoin is down by about 7 per cent on Tuesday compared to Monday, and is currently trading at close to $42,000.
Ethereum (ether) has also fallen by more than 7 per cent, while Cardano (ada), Solana (SOL) and dogecoin have also lowered in values by over 5 per cent compared to their prices a day earlier.
While it is hard to pinpoint exactly what caused the prices to drop, some experts tie the latest flash crash to China’s property market.
Some analysts warn that the latest price dip could form part of a longer term trend while others remain convinced that any short term volatility will ultimately be forgotten as bitcoin rises to new all-time highs in 2021.
You can follow all the latest news, updates and expert price predictions in our live blog right here.
The price of Ethereum (ether) has finally fallen below the $3,000 mark after holding on for nearly a day above the milestone figure.
Cardano (ada) is now also threatening to dip below the $2 mark, while dogecoin is hovering dangerously close to the $0.20 mark.
Bitcoin remains above $40,000, though only by a couple of thousand dollars. The latest losses suggest this week’s crash is not quite over, and by the time this downturn does end there may be a lot of key price markers to reconquer.
Bitcoin price right now is irrelevant – MicroStrategy CEO
One of bitcoin’s most prominent backers has described the latest price fluctuations as unimportant when taking into consideration the cryptocurrency’s future prospects.
MicroStrategy CEO Michael Saylor, who has led the software company to become the world’s biggest corporate investor in bitcoin, tweeted that this week’s price or last week’s price won’t matter “in the long run”, as they will both be just a tiny fraction of its ultimate value.
Last week the firm bought a further quarter of a billion dollars worth of bitcoin to take its total holdings above $5 billion.
Is bitcoin price still on track for $100k in 2021?
Zooming out on the longer-term market may put bitcoin’s current price difficulties in perspective, but it offers little help in predicting its future trajectory.
Analysts remain divided over whether this is the end of a so-called “dead cat bounce” within a bear market, or if it is just a blip on the way to new all-time highs in 2021.
Subscribing to the latter theory is Brad Yasar, CEO of decentralised finance (DeFi) firm EQIFI, who shared his thoughts with us. He believes bitcoin “isn’t going anywhere near” $25,000 and could still hit $100,000 this year. Here’s what he had to say in full:
Price fluctuations are to be expected. Zooming out, prices fluctuate, but the value will continue to rise. This is the reason behind the concept of dollar-cost averaging and why so many pros advocate for it. With so many models highlighting a multitude of futures for bitcoin’s price, it is impossible to make specific predictions.
When looking at crypto prices, it is always advisable to consider changes in public sentiment and Government regulations which may affect that sentiment. With continued widespread adoption and sentiment enhancement, we could see BTC hit $100,000 in 2022. We could even see this happening as early as November 2021 if there is a rally.
We may see continued dips, but BTC isn’t going anywhere near, say, the $25k mark. It could always happen, but given the institutional interest in acquiring more BTC and continued adoption across a variety of industries, it would be difficult, but it doesn’t mean it could not happen.
BTC will bounce back from today’s low points due to wider adoption whether it comes from retail investors or institutions. It doesn’t matter, more demand means higher prices
A common mantra among bitcoin enthusiasts is ‘when in doubt, zoom out’.
The idea is that any short term price movements seem relatively insignificant when taking a broader view of the cryptocurrency market.
The current price of just above $43,000 is still more than twice that of any previous high seen before 2021. The question many analysts are asking this morning is whether this current cycle will mirror that of those seen in 2013 and 2017 – and if so, is it on the way up or down?
One of the more remarkable things about the latest bitcoin price crash is that it fits in with an extremely positive price prediction model.
Pseudonymous analyst PlanB has amassed more than 800,000 followers on Twitter, largely thanks to the prescience of his Stock-to-Flow (S2F) model that he first applied to the cryptocurrency back in 2019 when the price was below $4,000.
The forecast, which takes into account bitcoin’s inbuilt scarcity, put it on a path way beyond $100,000 in this current market cycle, however with each price crash come fresh doubts.
After the price fell dramatically in the months following April’s all-time high above $64,000, PlanB made a rough estimate of the path bitcoin could take to reach above $100,000 before the end of 2021.
The June prediction put bitcoin at $47,000 in August (it closed last month less than a couple of hundred dollars off that price) and at $43,000 in September (roughly today’s price), before surging to $63,000 in October, $98,000 in November and $135,000 in December.
While it is hard to pinpoint what exactly caused the latest bitcoin flash crash, some experts say it could be tied to China’s property market.
Experts say concerns surrounding speculation that the Evergrande Group – China’s second-largest property developer – will default on its $300 billion in debts could be driving the current crypto market crash.
To allay fears over the property developer defaulting on its pay, Chinese authorities have injected about $14 billion into its banking system.
However, the cryptomarket continues to nosedive, valued currently at $1.87 trillion – dropping in value by over 7 per cent in the last 24 hours.
Bitcoin, which was valued at close to $47,000 on Monday morning, is currently priced at $42,000, with no signs of recovery yet.
Other cryptocurrencies, including Ethereum (eth), Solana (sol), and Dogecoin (doge), are also down by more than 5 per cent over the last 24 hours. The chart still looks all red with no signs of recovery yet.
One reason for El Salvador’s president, Nayib Bukele, to “buy the dip” today is because he sees the long-term potential of the cryptocurrency in countries such as his.
Just two weeks after El Salvador officially introduced the Bitcoin Law, which officially made the cryptocurrency legal tender, more than 1.1 million people are already using it as a day-to-day currency. That’s roughly one sixth of the country’s population that didn’t previously have access to traditional financial services.
“It seems that we will be able to bank more people in one month, than they did with nationalisations and privatisations of traditional banks in 40 years,” President Bukele said.
It prompted another staunch believer in bitcoin, MicroStrategy CEO Michael Saylor, to praise bitcoin and the stance El Salvador has taken. As the largest corporate investor in bitcoin, with billions on its balance sheet, it wouldn’t be surprising to learn that Saylor is also buying the dip.
Many long-term bitcoin holders are using today’s price crash to push the “buy the dip” narrative in the hope that it will bounce back stronger.
Bitcoin podcaster Cedric Youngelman even goes as far as describing it as “the greatest buy zone in history”.
Other traders are offering a more cautious view on the market, with bitcoin author Glen Goodman describing it as “choppy hell” that is too risky to call either way.
“This is why most of my money remains on the sidelines, waiting for better opportunities,” he says.
The price of bitcoin appears to have stabilised at around $44,000 following the series of flash crashes earlier in the day that saw it drop from above $48,000.
Other leading cryptocurrencies also seem to have levelled out, with Ethereum (ether) just holding above the $3,000 mark and dogecoin managing to keep above $0.20.
Which way it goes from here depends on who you ask, with many bitcoin maximalists backing up Salvadoran President Nayib Bukele by claiming that now is a great time to “buy the dip” in anticipation of future price gains.
Bitcoin sees huge interest from institutional investors
One thing that has been interesting about major bitcoin price crashes in 2021: each low has still been way above any previous high seen in 2020 or earlier.
One reason for the lows being not as low as those in the past is that bitcoin is now bolstered by massive institutional investment. New research from Fidelity Digital Assets has found that 52 per cent of institutional investors now hold bitcoin or other cryptocurrencies
We’ve heard from Simon Peters, a market analyst at the online trading platform eToro, who explains what this means for the overall crypto space.
The results demonstrate the appetite of investors for cryptoassets in portfolios with some 80 per cent of Asian investors and 75 per cent of European investors saying they have plans to buy cryptoassets. 70per cent of Asian investors already hold some form of cryptoasset.
An impressive 84 per cent of European and US investors expressed an interest in purchasing institutional investment products that contained cryptoassets.
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