As a digital asset class, Bitcoin has been both acclaimed and scrutinized for its characteristics. The high volatility is Bitcoin’s primary feature by which many social interplays occur. As JP Morgan reported in a letter to investors, the increase in liquidity can be determinant for Bitcoin’s low volatility.
While statements in the crypto space about Bitcoin’s store of value and support from institutional investors create equilibrium between supply and demand, Bitcoin is still dependent on social opinion. Similar to the stock market tendencies, news affects the price of cryptocurrencies. Although Bitcoin has hooked onto a status of the “digital gold” trademarked volatility, it’s the biggest downfall after the price of Bitcoin plummeted nearly 50% from its previous all-time high.
Is there support at 30k?
Breakout news concerning Bitcoin and cryptocurrencies have remodeled the market retail and institutional sentiment towards crypto. According to Eugene Ng, head of business development at Gemini in Asia, stated “systematic algos have turned short” and expects to retest the lower support levels over the weekend. Additionally, Bitcoin’s dip fueled by rejecting news hurried investors to take profits off the table, as they fear a massive sell-off.
Overlapping negative news regarding Bitcoin, starting with Elon Musk stating that Tesla (NASDAQ:TSLA) will no longer accept Bitcoin, the Chinese government reiterating their stance on crypto, and the U.S. government planning to tax crypto transactions higher than $10.000, changes the narrative of Bitcoin cryptocurrencies. In the current market, traders fear a slow bleed similar to 2018; however, they have stated that Bitcoin will range between $30.000 and $42.000. Still, Bitcoin is melting, and as price data suggest, there is still room to fall.
Data from Glassnode suggests Bitcoin miners are currently not selling, and whatever selling takes place is all investors and retail traders. What’s more, leverage trading wipeouts are healthy for the cryptocurrency market. Additionally, a strong pullback is natural in every market, and investors claim to be a healthy sign for more upswing momentum. Although many traders remain optimistic, it depends on how well institutional and retail traders digest the 35% price dip since last week, which affected altcoins even stronger.
Is there support at $30,000? Data from TradingView suggest there is; however, traders have first highlighted that the first support level is at $42.00, which shattered completely. There is an upswing and positive hope in the market as people take advantage of the discounted Bitcoin. Michael Saylor tweeted “entities” are acquiring large sums of Bitcoin, indicating there is still a high demand for digital gold. While Bitcoin is on a downward momentum, predicting the price of an asset that doesn’t behave as regular stocks is difficult.
On the Flipside
- Elon Musk’s hot and cold evaluations about Bitcoin generate uncertainty and instability in the minds of new retail investors.
- Cryptocurrencies have no intrinsic value; thus, they don’t have a framework that could suggest when the price bleed would stop.
- Bitcoin’s volatility indicates the cryptocurrency is a store of value for many investors.
- The price of Bitcoin has reached previous high and low swings and has always rallied to new all-time highs.
The Media Effect On Bitcoin
Social media and the affordances of the internet have funneled Bitcoin and cryptocurrencies towards a mass audience. After being traded and talked about on forums and bulletin boards, cryptocurrencies are now seeing investments from institutional and corporate investors. What’s more, they are placed on a pedestal or obliterated with critique. Social media paints the grand picture to the masses in the current state, including topics about cryptocurrencies. It controls investor’s moods and can drastically alter the market sentiment towards the digital asset.
According to data, Gen Z and Millenials are more eager and excited about cryptocurrencies. Additionally, they encompass the ideal demographic of social media platforms. The issue surrounding social media in a highly informative era is that it lacks clarity. Information is not verified, and it can influence judgment without even realizing it. What’s more, research indicates that the higher the number of bullish posts, the higher the value of Bitcoin in the future, and vice versa.
FUD in the market can spread like wildfire in a highly connected network as Elon Musk’s activity highlighted, Bitcoin’s or DOGE’s price dependent highlights his actions positively and negatively. To that end, the price of Bitcoin could suffer further losses if media attention shifts towards the disadvantages of cryptocurrency. However, support levels are in play, and investors are still buying into Bitcoin despite the impressive price drop.
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