The bitcoin price fell 26.1% in the week of May 10-16, according to Coin Metrics. The new BTC holders sold with risks of loss, but the big holders still keep it up on HODL.
Bitcoin has not been trading at $40,000 for at least three months. February 8 was the last day that the first cryptocurrency traded at $ 39,000, right before the purchase of $ 1.5 billion in BTC by the car company run by Elon Musk, Tesla. The price has been fluctuating since then with a rally whose biggest correction intends to maintain the support of $ 48,000.
The company’s purchase seems to influence both the recent statement of the Chinese government prohibiting institutions and means of payment to operate with cryptocurrencies, as well as the disclosure of the risky investments that the company makes behind the stablecoin Tether with the money of its users.
These pieces News do not Cause Enough Impact on the Market
This news is part of some kind of propaganda instilled with fear, uncertainty, and doubt (FUD) that the Bitcoin industry has been accustomed to for years; they might not have had enough effect on market psychology.
It is vital to consider that the ground the bitcoin’s price has gained since February, until reaching its all-time high of $ 64,800 on April 14, has been completely erased. The price is at the same price as before Tesla revealed its billion-dollar purchase.
This situation is a total trigger for the fear and greed index, which gauges extreme fear to a level not seen since March 2020, when the WHO declared a Covid19 pandemic. Also, the injection of bitcoins to exchange houses returns to levels of that black Thursday in which the cryptocurrency lost 40% in a few hours.
New Holders Fear Unpredictable Volatility
The correction of the bitcoin price in the week of May 10 to 16 was the subject of analysis in Glassnode, which made a report published on Monday 17. The analytical firm points out that, in that period, a correction of 26.2% was registered. It was a sudden reaction to a series of tweets by Elon Musk expressing concern about the energy consumed by Bitcoin.
This firm highlighted that, in different tweets, Musk went from positions critical of bitcoin mining to argue that the Dogecoin blocks were 10 times faster and larger than those of bitcoin, which created a confusing situation in the market, according to Glass node.
There are many supply and demand dynamics that resemble the top of the 2017 cycle, but there are also important differences that could challenge the beliefs of both bears and bulls, Glassnode argues.
How the Magnitude of Bitcoin Corrections Affect the Crypto world
Starting from the moment of the last all-time high of $ 64,800, which happened on April 14, the price correction recorded in recent weeks is 28%, according to the analysis led by Glassnode. This analysis puts this correction as the largest correction of the current bull cycle. In terms of cycle length, bitcoin’s current bull run has lasted about 200 days, which is relatively short compared to the 2017 cycle, the study notes.
By: Jenson Nuñez
