Bitcoin Down

Bitcoin Down More Than 40% From High As FUD Fuels Sell-Off

 

Bitcoin has fallen sharply over the last several days, shaving more than 40% off the all-time high it reached on December 17.

The world’s largest digital currency by market capitalization (market cap) declined to as little as $10,834.94, according to the CoinDesk Bitcoin Price Index (BPI).

At this price level, Bitcoin had lost roughly 45% since hitting a fresh, all-time high of $19,783 on December 17, additional BPI figures show.

[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]

FUD

When explaining the reasons for this sharp price decline, several analysts emphasized the impact of FUD (fear, uncertainty and doubt).

“It’s clear by now that the entire crypto market is in a massive retracement,” said Mati Greenspan, senior market analyst for social trading platform eToro.

“It started with a bit of profit taking but it seems that the FUD is now gripping the market.”

Charles Hayter, co-founder and CEO of digital currency platform Crypto Compare, emphasized that while this negative sentiment has been playing a role in Bitcoin’s recent losses, other factors have been fueling the decline.

“With the end of the year in sight a lot of investors will be taking profits and saying thank you very much and closing their books for the holiday period,” he said.

“There’s too much volatility to take a risk of being offline.”

Interestingly enough, BTC/USD trading has been helping drive Bitcoin’s market activity as of late, according to CryptoCompare data.

Earlier today, BTC/USD trading made up 57% of all Bitcoin transactions, whereas the JPY/USD pair accounted for 21.6%, CryptoCompare figures show.

Earlier in December, JPY/USD trading approached 65% of all activity, whereas BTC/USD made up roughly 21% of these transactions.

Buying Opportunities

After highlighting the factors that drove the recent losses in Bitcoin, both analysts emphasized that this downturn has helped create buying opportunities.

“Bitcoin has seen an unprecedented rise and a lot of traders have been waiting for this large correction,” said Hayter.

Greenspan offered similar sentiment, stating that “Those who have been in this market for a while are not nervous.”

“We’ve seen this type of action many times before,” he stated. “In fact, the traders out there have been expecting it.”

Iqbal Gandham, UK Managing Director at eToro, stated that investors may be better off taking a long view of digital currencies.

Bitcoin and other cryptocurrencies are best held as a long-term investment. Trying to optimise the bumpy road by buying and selling each trough and peak is lucrative but highly risky. Instead you should take your own view on the future potential of blockchain technology and its different applications, and make your investment decisions from there.

Even though Bitcoin has pulled back lately, it was still up more than 1,000% year-to-date when falling to its recent low of less than $11,000, additional BPI figures show.

Disclosure: I own some Bitcoin, Bitcoin Cash and Ether.

copied from forbes