12.01.202114:42 Forex Analysis & Reviews: Bitcoin collapses

Exchange Rates 12.01.2021 analysis

On Monday, January 11, the bitcoin price plunged 20%, dropping below $32,000.

Experts say it was an expected drop given the high volatility of cryptocurrencies. The decline has even reached 26%, but now the price is correcting and going up again. In other markets, the situation is also tense. Gold, silver, European and the US stocks are also falling. If the price of bitcoin remains at the same levels by the end of the month, it will be a worrisome sign, experts say.

Bitcoin's skyrocketing growth began on December 16, hitting an all-time high of $20,042 per token. Since then, Bitcoin has continued to amaze the markets, conquering new peaks. BTC set a historical maximum on Friday, January 8, hitting a new high of $41,950, but has corrected markedly since then. Today the first cryptocurrency is trading at $36,240.80.

Exchange Rates 12.01.2021 analysis

Bitcoin accounts for 68.5% of the entire global cryptocurrency market.

But why did bitcoin drop in price so sharply?

Experts explain that the collapse is associated with a long-awaited and necessary correction. However, the cryptocurrency can be supported by new fiscal and monetary stimulus, as well as successful vaccination and the victory over the COVID-19.

The main reason for the current decline is the rise of the coin to a record high, which happened as much as 2 times in a month, and without further correction.

If you recall the history of the previous cycles, you will notice that such rate crashes have already happened.

Experts note that the growth of the bitcoin rate continued for 300 days, and there has been no correction by more than 20% since March 2020. In 2017, the exchange rate collapse by 30-40% occurred more than three times. The market may have peaked.

Additional factors to cause the collapse are historical highs in the US stock markets amid the coronavirus pandemic, as well as strong resistance of the US dollar index at the level of 90.

In addition, analysts say that if bitcoin holds at the same level until the end of the month and does not fall below it, then there is a possibility that the price will continue to rise.

Kate Smirnova,
Analytical expert of InstaForex
© 2007-2021
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