Following a brutal sell-off in early December, Bitcoin (BTC) has seemingly recovered, enough so to let industry analysts believe that the bull run is still in place. As we observe trading chart analytics and the factors leading to the market dip, we once again witness the resilient nature of the world’s first and biggest cryptocurrency.
Bitcoin Loses 20% Of Value In Hours
On 3 December in a matter of just under 20 hours, the Bitcoin price dropped by 21%, down 35% from Bitcoin’s all-time high achieved just a month before on 10 November 2021. The all-time high is believed to be a result of the SEC giving the green light to the first-ever U.S. exchange-traded Bitcoin ETF.
The sharp decline has been likened to several factors, including the new Covid-19 variant Omicron. The second-biggest cryptocurrency, Ethereum (ETH), also saw price drops of 12%.
Omicron Crashes Global Markets
The discovery of the latest Covid variant sent a wave through global markets, beyond just the cryptocurrency industry. The variant was first discovered by scientists in South Africa, before the World Health Organisation shared the news with the rest of the world on 24 November.
The announcement caused an immediate decline in U.S. equity benchmarks while European stocks dropped to lows last witnessed in July. The S&P 500 also saw a decline of over 4%, making it the worst trade day of the year.
Through the years Bitcoin has been deemed both a risk on and risk off asset, and recent liquidations indicate that some investors in the market are looking to activate a risk off mode for their portfolios.
On a side note, an obscure cryptocurrency also called Omicron which launched weeks before the announcement saw price gains of nearly 800%, reaching highs of $692.45 in a matter of days. In the days that followed, the cryptocurrency saw several spikes in price before dropping back to lows of $74. This echoed similar sentiment to the recent Squid Games scam which saw investors losing millions.
Factors From Around The World
While there is much speculation in the market as to the reason why Bitcoin (and as a result, multiple other crypto markets) saw a sharp decline recently, there are several other factors coming into play from countries around the world.
China’s crypto crackdown has continued with as much force as initially exerted with further clampdowns on mining operations while India has take steps to ban all privately-owned cryptocurrencies. In the U.S., many are anticipating the outcome of Congress questioning top crypto execs to be negative for the markets, SEC Chairman Gary Gensler released new comments regarding crypto regulation, and a recent announcement from the IRS regarding new crypto tax reporting regulations was also released. Many believe these negative sentiments to have played a role in the recent price drops.
Bitcoin On The Rise
On a technical level, the recent low of $46,581 is higher than the lows recorded in September ($39,600) indicating that the bull run is not over. Bulls are anticipating Bitcoin to challenge the $55,000 and $60,000 levels before the end of the year, some calling it the “Santa Claus rally”.
Whichever side of the fence you might be, it’s worth noting that Bitcoin is still up 85% from last year. If you’d like to add the digital currency to your stocking this year, do so effortlessly with Oobit and the convenient payment options at hand.
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