Cryptocurrency Bitcoin Ethereum Dogecoin
Cryptocurrencies turned sharply on Tuesday, extending a recent streak of wild swings.
For the first time since January, bitcoin, the world's most popular digital currency, briefly fell below $ 30,000, a key level that technical analysts monitor. It erased its earnings for 2021 before recovering to trade at $ 32,481.93, according to CoinGecko, a crypto market data site.
Bitcoin at one point lost more than 10% to trade as low as $ 29,154.73, losing more than half its value since hitting a record high in April. Digital currency surging more than 300% after a tremendous performance in 2020.
Other cryptocurrencies joined the selloff before cutting losses, with Ethereum, the second-largest digital currency by market value, dropping more than 5%. It is now up 0.7% in the last 24 hours.
The sale also spread to smaller coins like Dogecoin, meme-inspired crypto that at one point fell more than 25% to erase all of its gains since April. Since then, it has reduced declines and is down 1% in the last day.
Why are cryptocurrencies falling?
After surpassing $ 64,000 in April, bitcoin has struggled to regain its all-time highs since then following a series of events. It came under pressure in May after tech billionaire Elon Musk, who has driven traders into a frenzy by mentioning crypto on occasion, said Tesla will stop using Bitcoin as a form of payment over concerns about the cryptocurrency's impact on markets fossil fuels.
Since then, cryptocurrencies have moved like currencies like ethereum to move in tandem with bitcoin.
In early June, bitcoin fell further amid concerns about its use in the Colonial Pipeline ransomware attack.
Bitcoin, for example, briefly touched $ 40,000 last week and fell again on Monday after China's central bank deepened its crackdown on cryptocurrencies. China's central bank said it ordered some banks and payment companies, including China Construction Bank and Alipay, to crack down on cryptocurrency trading.
Bitcoin lost more than 10% on Monday, its biggest one-day drop in more than a month.
How much have cryptocurrency such as Bitcoin, Ethereum and Dogecoin lost in value?
With Tuesday's losses, bitcoin has slid more than 50% from its all-time high above $ 64,000 in mid-April. To be sure, bitcoin is still up over 200% in the last 12 months.
Ethereum has lost nearly 57% from its all-time high of $ 4,356.99 in May, while Dogecoin has lost more than 70% since hitting a record high of around 73 cents last month, according to CoinGecko.
Is more pain to come?
Cryptocurrencies could be poised for further declines based on a closely watched indicator, according to technical analysts.
Over the weekend, bitcoin formed a death cross, a chart pattern indicating the potential for a large sell-off. The average price of Bitcoin in the last 50 days fell below its 200-day moving average, which means that there could be more pressure on the digital currency.
"Long-term bitcoin bulls are getting nervous because a breakout of $ 30,000 could generate a tremendous amount of sales," Edward Moya, senior market analyst at currency exchange service OANDA, said in a recent note. "Cryptocurrency traders expecting a drop towards the $ 20,000- $ 25,000 area.”
Some analysts believe that the bitcoin sell-off in May weakened institutional demand, which is likely to keep prices under pressure in the short term.
"There is little doubt that the boom-and-bust of Bitcoin and Ethereum," JPMorgan strategist Nikolaos Panigirtzoglou said in a report early this month.
Still, some are using the recent decline in bitcoin as a buying opportunity. On Monday, MicroStrategy, an enterprise software company, said it collected an additional $ 489 million in bitcoins, bringing its total holdings to 105,085 bitcoins.
Are cryptocurrencies right for you?
First-time investors should proceed with caution. Piling all of your savings into something as volatile as cryptocurrencies poses big risks to your retirement, experts say. Wealth managers and finance experts have long been sceptical of these speculative investments for hobby-investors due to their extreme swings.
In 2013, bitcoin started trading around $ 13 and rose to more than $ 1,000 in December. In late 2017, bitcoin token rose to nearly $ 20,000, before dropping to nearly $ 3,000 the following year. What followed was a skyrocketing rise above $ 64,000 in April 2021.
Dogecoin has seen similar booms and busts. It has ridden a similar wave driven by Reddit as stocks like GameStop and AMC in recent months, accelerated by a series of tweets from Musk, who was pumping the cryptocurrency.
Even with the latest drops, the sharp rise in the value of bitcoin earlier this year has some analysts concerned about a possible bubble in the cryptocurrency market, with the price of bitcoin, at one point, more than doubling since the beginning from 2021.
About 81% of fund managers surveyed in a recent Bank of America survey in June said that bitcoin was still a bubble. That represents an increase of about 75% from managers who said it in May.
"Can bitcoin will recover this time? While there is no guarantee. Those who believe in its long-term future may well see this as an opportunity.
"Cryptocurrency Bitcoin Ethereum Dogecoin" there is opportunity and drawback also.
"Every individuals, need to know the risks of what they own," Royal added. "In some cases, the risks could create loss of your investment."
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