It is a bad day for Bitcoin fans as the cryptocurrency giant drops to below $8000 which is its lowest in a month. The last seven days have been a downtrend for Bitcoin as investors diversify their investments to stocks, bonds, and other mainstream assets.
The divergence of the investment may mainly be due to low liquidity in the crypto ecosystem. According to the head of investment at Arca, there is barely new money that is coming into the crypto world hence the mainstream assets are more likely to have relatively higher returns. Stocks, bonds, and gold perform better comparatively. The fact that there has been pressure to diversify investments, it has made new investors in the block to take a cautionary approach which gives cryptocurrencies a downward pressure especially Bitcoin.
There have also been many other factors such as negative publicity that have led to the drop in the performance of the cryptocurrency. There has been a general drop in the performance of cryptocurrencies due to rejection in many places and that has fueled the sell-off. For example, there has been a strict regulation and crackdown of crypto exchanges in China. Even the crypto exchange giants such as Binance and Tron have been banned in China according to the Chinese social-media giant Weibo. Ex- PayPal chief Roelof Botha tweeted that his bank account with Bank of America was closed with no notice. Assumptions are that it was closed because he bought Bitcoin with it. Another sign of negative publicity is when R3 CEO David Rutter commented on Facebook’s digital coin Libra of being
Ridiculously stupid.
The comment faced a lot of controversies especially since it is coming from a crypto expert who has a company building its own blockchain ecosystem.
Bitcoin has had a series of decline, from its all-time high of $20,000 to $13,000 and now $7,900. Bitcoin will need to make a big leap of more than 1670% to make an exchange-traded fund for the coin possible. As of Friday at 3 pm Bitcoin was trading at $8,488 while on Thursday, 6 days later it was trading at $7,900 a drop of 6.9% in just a few days. Bitcoin has had a strong market position for a long time and the drop was not anticipated. According to Tom Lee’s interview with Bloomberg, the coin will need to hit the $150,000 per coin to make an ETF feasible.
Image by Lorenzo Cafaro from Pixabay
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