What Makes Bitcoin Drop in Price
Bitcoin price drop: a bubble or an expected situation
On November 24, Bitcoin’s price reached the mark of $19 279 per coin, being close to its all-time high indexes. The market capitalization of the first crypto was $357 billion, setting a new record. Meanwhile, in two days BTC prices had tumbled to $16 369 – the first crypto lost 15.1% of its value. Bitcoin skeptics mushroomed up, keeping to call the first crypto a bubble. Meanwhile, the experts understand Bitcoin price drop as an expected situation.
Overheated markets and the FoMO syndrome
The crypto experts highlight the fact that the markets were overheated, as both private and institutional investors had rushed to purchase the first crypto. The number of BTC whales (addresses with 1000 Bitcoins or more) reached an all-time high mark in October 2020. Furthermore, the number of new and active BTC addresses almost reached the indexes of 2017. Many people invested in crypto because of the FoMO (Fear of Missing Out) syndrome – everyone expected to get their piece of the crypto pie that was growing by leaps and bounds.
Hence, the analytics say that Bitcoin drop in price was just a matter of time.
Meanwhile, the drop is good news for the community, although it sounds ridiculous. That is a test for investors to determine their attitude towards the crypto market. The year 2017 showed that crypto investors were not ready to understand this sector as a powerful instrument to keep their funds in.
Bitcoin price drop news made some investors sell crypto. This year is expected to show whether investors believe in a new class of assets or just capitalize the growing interest.
Advantages over fiat money are still in-game
What can make Bitcoin price drop? Aside from overheated markets, legislative items come to the fore, and BTC faces no difficulties from this point of view. Parliamentarians cannot deny the fact Bitcoin’s popularity is on the rise. Moreover, developed countries strive to work on some legislative norms to somehow control this sector, calling digital assets a threat to the traditional financial system.
While talking about the advantages of digital currencies, they are still activated.
Fiat currencies undergo inflation and are losing their value gradually. For instance, USD, considered the top-rated currency, has lost more than 10% of its value within 6 years. The year 2020 is about to speed inflation processes up. Bitcoin and altcoins are not impacted by inflation; hence, investors see this instrument as a safe harbor.
Black Friday for Bitcoin: the last chance to buy?
Investors are interested in how to know when Bitcoin price will drop, and there are many trading signals to take into account. This time the BTC price drop happened the day before Black Friday, and the experts joke that it was the last time to purchase the first crypto cheaper. Since Black Friday Bitcoin won back several positions, overrunning the point of $18 000. Ups and downs are entirely normal for digital assets, and when a trader or investor cannot understand why Bitcoin price drop happens, it’s high time to remember that volatility is among the key-note characteristics of the crypto market.
To look through a broader lens, the crypto market is flourishing. The number of active and new addresses increases, the list of Bitcoin-accepting companies expands, and institutional investors prefer to add BTC to their portfolios.