Bitcoin (BTC) briefly exceeds $ 40,000, struggles to recover from selling

Bitcoin (BTC) briefly exceeds $ 40,000, struggles to recover from selling

A customer uses a Bitcoin automated teller machine (ATM) at a kiosk in Barcelona, ​​Spain on Tuesday, February 23, 2021.

Angel Garcia | Bloomberg | Getty Images

Bitcoin fluctuated between gains and losses on Thursday as the world’s largest cryptocurrency struggled to recover from a sell-off in the previous session.

The digital currency initially climbed Thursday morning, hitting $ 40,700 at one point, before dropping to $ 38,965, according to data from Coin Metrics. It was the latest increase of 2.6% to a price of $ 39,980.

Some of Bitcoin’s younger alternatives also attempted a comeback on Thursday, with ether up 2.2% to $ 2,676 and litecoin up 3% to $ 209.

It comes after a brutal dive for cryptocurrency markets. Bitcoin plunged 30% to nearly $ 30,000 at one point on Wednesday, before making up for some of those losses later in the session. The entire crypto market has lost hundreds of billions of dollars in value in a single day.

The decline was likely driven by mixed signals from Tesla CEO Elon Musk – who declared himself a bitcoin supporter earlier this year – and by a regulatory crackdown on the market in China.

On May 12, Musk said his electric car company had suspended vehicle purchases with Bitcoin due to environmental concerns over the cryptocurrency. Bitcoin uses more energy than entire countries like Argentina and Ukraine, according to Cambridge University researchers. This is due to the energy-intensive “mining” process that puts new bitcoins into circulation.

Earlier this week, Musk suggested that Tesla may have sold his bitcoin holdings, to later clarify that the company had “not sold any bitcoin”. Wednesday it tweeted the ‘diamond hands’ emoji, implying that the electric vehicle maker would not lose any of its bitcoins.

The news China got also weighed on the price of bitcoin on Wednesday. prohibits financial institutions and payment firms from providing cryptocurrency-related services, reiterating its firm position on digital currencies.

“If you look at the history of bull markets, a correction of this size, between 30 and 40% of the price of bitcoin, tends to be part of the bull market,” Alyse Killeen, founder and managing partner of a capital company -bitcoin-driven risk Stillmark Capital, CNBC told CNBC on Wednesday.

Institutional investors jump ship?

Bitcoin investors say the cryptocurrency has become a kind of ‘digital gold’, offering protection against rising inflation as central banks around the world print money to soften the economic blow. the coronavirus crisis. They say this has led to an increase in purchases from institutional and corporate investors.

However, in a note to clients this week, analysts at JPMorgan said institutional investors abandoned bitcoin in favor of gold, reversing the trend that has unfolded over the past two quarters.

“I’ve spoken to friends in the institutional bitcoin buying and custody space… and what I’ve heard from them is that people don’t sell,” Killeen said.

“What you saw was new buyers were coming out and long term holders were piling up or ‘hodling,“and this is what we have historically seen during these larger declines in bull markets,” she added.

Meanwhile, there have been various signs of foam in the crypto market lately. Dogecoin, a digital currency inspired by memes, has seen a breathtaking rally earlier this year, powered by supporting comments from Musk and other celebrities like Mark Cuban and Gene Simmons.

Crypto-skeptics would argue that all digital assets are in a speculative bubble. In a close survey of fund managers, Bank of America found that “long bitcoin” was the most crowded trade. According to the firm, 75% of fund managers said the cryptocurrency was in bubble territory.

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