Bitcoin has experienced some minor setbacks but its market has generally remained bullish, with strong demand from institutional and retail investors. Analysts predict that there will be an essentially bearish mood in the futures market on Bitcoin.
The oldest members of the cryptocurrency community are used to constant rises and falls in Bitcoin’s price. For that reason, they have not found anything abnormal in the last few days. However, the newest members of the cryptocurrency world have seen that period as a nightmare not likely to end soon. According to experts, the volatility in the Bitcoin market will not end anytime soon.
Bitcoin Recovers but There Is Pessimism about the Volatility in Its Market
Although the first cryptocurrency has experienced some minor setbacks, its market had been optimistic since the end of last year. It has generally remained bullish and there has been strong demand for Bitcoin from institutional and retail investors.
However, a series of setbacks recently made everything change, leading the cryptocurrency market to collapse. This happened after Tesla announced that it would stop accepting Bitcoin as payment for its electric vehicles. The reason for that decision was that Bitcoin mining allegedly causes damage to the environment. In addition to that, China announced that it would tighten its already strict regulations to prevent cryptocurrency transactions within its financial institutions.
This situation caused panic among investors, who lost their confidence in the future of the price of Bitcoin. The price of the pioneering cryptocurrency collapsed to USD 31,128 per unit, after having traded at a high of USD 64,829. Although it has recovered to around USD 38,124, there is still pessimism about the future of the volatility in the Bitcoin market.
Governments and Regulators Will Not Stop Making Pressure to Control Bitcoin
This is not the first time that the price of Bitcoin has experienced changes of this type. The price of the cryptocurrency has shown changes greater than 5% in 39 days so far in 2021 in all the addresses. Throughout 2020, these changes occurred in 42 days, which indicates the current level of volatility in the Bitcoin market. This situation could become even worse as government pressure increases to set regulations on this sector.
“The drubbing that cryptocurrencies have received in the last two weeks is just a taste of things to come. The cryptocurrency markets will continue to face increasingly strict regulations. In the short term, the pain in these markets could drag down other speculative assets such as tech stocks,” said Peter Berezin, the Director of Global Strategy at BCA Research.
Carter Worth, the Chief Market Technician at Cornerstone Macro, predicts that several Bitcoin holders would sell when its price returns to USD 42,000. Analysts at JP Morgan also note there is an essentially bearish mood in the futures market on Bitcoin. These elements are enough to predict that this period of volatility for Bitcoin will not end in the short term. There may even be another sharp fall in the price of the pioneering cryptocurrency again.
By Alexander Salazar
