Bitcoin Tumbles – What Makes the Markets
Bitcoin tumbles to a low of two weeks, and expert analysts pointed to a tech failure as well as the restoration of the Colonial Pipeline Company buyout as proof that the virtual currency is not controlled by the government.
The falling percentage of the token is about 9.9%, which is $31,036, although it managed to recover some of the losses and amounted to around $32,363 as of 2:31 (New York time) on June 8, 2021. The Bloomberg Galaxy Crypto Index fell 15%, but during the day, it reduced its losses. Other altcoins like Ether, Litecoin, and EOS also have not spared the fall.
What Makes the Markets
“Bitcoin can’t get a break,” said Antoni Trenchev, Nexo co-founder and managing partner. “Big picture, what we’re experiencing here is a tedious, drawn-out regulatory overhang which will continue to weigh on the Bitcoin price. Ultimately it’s good for the industry – and crypto needs the right sort of regulation – but for short-terms out there, it’s probably best to look away.”
The U.S. government has reclaimed nearly all of the bitcoin ransom paid after the cyber-attacks on Colonial Pipeline on May 7, 2021, which means that law enforcement authorities and federal agencies can pursue online criminals even if they operate outside the country’s border.
The FBI has tracked down Bitcoin after finding digital addresses that hackers used for money transmission, according to an arrest warrant issued by the Justice Department on Monday, June 7, 2021.
However, the FBI’s ability to track and reimburse crypto may run counter to the anti-establishment sentiment that led to the development of Bitcoin, but it can be seen as a positive sign for a sector seeking wider acceptance in society.
According to Mike McGlone of Bloomberg Intelligence, the Bitcoin fall on Tuesday is “linked to fears of the Feds seizing people’s Bitcoins.” Even so, “we’ve been in a down-phase for a month now and this is part of it. It’s a continuation of the latest downtrend and this is the latest spark. I thought Bitcoin would be up today on the Colonial news so I’m befuddled.”
For the moment, strategists continue to monitor the key technical levels of the crypto. One of them is the $30,000 level, to which the coin briefly dipped last month during a sell-off. But breaking this round-number level could trigger the next wave of sales, between $20,000 and $30,000in the absence of technical support. However, the relative strength index of bitcoin says that the token is approaching the oversold level, which indicates a possible respite.
According to Tallbacken CEO Michael Purves, if the coin continues to decline, and $31,000 and $30,000 are withdrawn, it could fully track its breakout from $20,000 and return to that level. “This type of ‘round trip’ would not be unusual for an asset (or a stock) which put in an exponential rally,” he wrote, adding that this happened after Bitcoin’s record rally in 2017.
Other market observers agree with Michael Purves’ words. “The major price support stands at the $ 30K level, and a slide below this handle could run into stops and accelerate the sell-off in the short run,” said Ipek Ozkardeskaya, senior analyst at Swissquote.
Oanda Senior Market Analyst Jeffrey Halley says a break below $30,000 could trigger “another capitulation.” Rich Ross, a managing director and head of technical analysis at Evercore ISI, sees an opportunity to test the support level around $29,000.
Bitcoin continues to rise by about 12% this year, but the token has dropped from a peak of nearly $65,000 in the middle of April, casting a shadow over the cryptocurrency industry. And the recent sell-off has been aggravated by Elon Musk’s public accusations of the amount of energy used by the servers supporting the token. Rough regulatory authorities of China have also darkened the mood.
“You had this phenomenon where Bitcoin got extended, but nothing goes up in a straight line,” said Dan Russo, a portfolio manager at Potomac Fund Management, Inc. “That’s something to be expected – you’ve seen throughout its short history these bouts of deep drawdowns. It just got extended to the upside and started to roll over.”
According to Vijay Ayyar, head of the Asia branch of Luno Pte, the crypto, which has more than tripled over the past year, is in a “cooling off period” that could continue “a few months” more.