- The price of Bitcoin fell by more than 25% over the past week. This is a brief explanation of what is causing the volatility in the price.
The price of Bitcoin fell by more than 25% over the past week as it went from $57,032 as of 1 PM on May 10 to below $43,000 today. This is considered one of the biggest price drops since the major bull run of the cryptocurrency as Bitcoin hit a high of about $64,863 as of April 14. The last time that Bitcoin was trading at its current price was back on February 8.
Coindesk pointed out that Bitcoin has seen 4 corrections from new price highs this year, but this was one of the biggest. Many traders have expected a sizeable pullback at some point due to the frenzy over the last year. The cryptocurrency is up more than 330% over the last year as it was trading at about $9,670 as of a year ago.
Part of the reason for the price pullback is due to investors turning their attention to other rapidly growing cryptocurrencies. For example, Ethereum increased by over 35% over the past month and Cardano is up over 40% over the past month.
Another reason why the price of Bitcoin fell over the last week was due to broader market sentiments involving concerns over inflation and Tesla’s decision to stop accepting the cryptocurrency for the purchase of its vehicles. Over the weekend, there was also speculation that Tesla would be selling off its significant holdings in Bitcoin. In February, Tesla bought $1.5 billion worth of Bitcoin and sold off about 10% of its holdings for a major profit in February. This Twitter exchange is what caused the speculation:
After that tweet caused a further sell-off, Musk tried to alleviate concerns by writing a follow-up tweet that said: “To clarify speculation, Tesla has not sold any bitcoin.”
Analysts are expecting this sizable pullback to trigger another bull rally. But a quick V-shaped pattern could still face challenges due to fears over high inflation and a few analysts believe that the dip could go even further before recovery.
Disclaimer: This content is intended for informational purposes. Before making any investment, you should do your own analysis.