On Friday, Bitcoin traded at $ 29,479 mark, losing 20.34% during the day. Such a decline in the value of the leading cryptocurrency was the strongest since March 2020.
In addition, this price decline provoked a reduction in BTC's market capitalization to 64.63% of the total capitalization of all cryptocurrencies. Yesterday, the digital coin was holding at the level of $29,461 to $30,838, while losing 22.76% during the previous week.
At the moment, Bitcoin's price declined by 7.14%, that is, to $ 31,866. Binance, on one of the largest cryptocurrency exchanges, also plummeted by 7.94% ($ 31,813).
Now, what about other cryptocurrencies? Some are in the same situation as Bitcoin, while some have it worse. For example, Ethereum shows a price level of $ 1,045, after declining by 30.95% in the morning. The market capitalization of the cryptocurrency is equal to 14.20% of the global capitalization of all virtual currencies. In turn, Tether is moving around at $1.0013, showing a growth of 0.04%. The capitalization of the cryptocurrency is equal to 2.85% of the total market capitalization.
Experts predict that Bitcoin will continue to fairly decline in the next few days as part of the correction.
This state of the cryptocurrency market indicates that the current bearish trend is hardly a momentary correction, which will most likely prevail for several more days. There is no doubt that investors understand this, but their pessimistic attitude will only prolong the current decline in the cryptocurrency market. Analysts believe that Bitcoin's exchange rate will fluctuate around $31,000 in the short term and may stop at $31,100 before this day ends.
It should be recalled that the price of this leading digital currency began to sharply increase last month. On December 16, it surpassed the historical level of $20,042, which had been held since 2017. In early January 2021, bitcoin broke another historical high of $ 41,950, but then began to significantly correct. The same fate happened to many other cryptocurrencies.
As a result, the market value of all global virtual currencies declined by $ 200 billion after reaching a record of $ 1.1 trillion in early January. Bitcoin suffered the most – it began to sharply fall amid frightening signals from the new US administration. In this case, the value of Bitcoin's entire volume declined around $ 180 billion compared to the record of January 8 of this year. At the same time, Ethereum lost 7%, XRP by 3.5%, and Cardano by 3%.
Today, experts do not suggest using cryptocurrency to diversify portfolios in case of a crisis. They argue that bitcoin does not only compensate well for short-term drawdowns of the stock market, but also becomes more similar to cyclical stocks over time, whose value is directly linked to economic cycles.
The statement of Janet Yellen (nominated US Treasury Secretary of Joe Biden) is also another factor that contributed to BTC's decline. Last Tuesday, she said that cryptocurrencies are very concerning, since they are funds for illegal financing. In addition, she proposed to examine how to reduce the use of digital currencies in order to combat money laundering.
However, such frightening prospects do not prevent institutional investors from scaling their activities in the field of cryptocurrencies. In view of this, BlackRock, an international investment company, sent documents to the US SEC stating that two of the company's funds intend to trade futures contracts based on bitcoins.
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