Why Is Bitcoin's Price Falling?
June 22, 2021 -Taylor Tepper
Bitcoin, the most famous digital currency, has been on a losing streak over the past few months after reaching an all-time high of more than $63,000 in the middle of April. It fell below $30,000 on June 22 for the first time since the beginning of the year before rebounding slightly.
For the year, Bitcoin has gained about 11% as of this writing, or about what the plain-Jane S&P 500 has yielded over the same time period.
“Bitcoin prices have established and continued to test a technical support level of $30,000 since January of this year,” said Alex Reffett, co-founder of East Paces Group in Atlanta. “As more technical traders have begun day-trading the asset, today we are seeing a continuation and retest of these support levels.”
While volatility has always been part of the Bitcoin experience—the price did fall more than 80% in the year or so after late 2017—there’s more at stake this time. After all, major corporations, including Fidelity and PayPal, have invested millions to get into the crypto game. And thousands more everyday investors entered the fray after state governments imposed lockdowns and the federal government distributed stimulus checks.
There are real reasons why demand for Bitcoin has dried up, from the serious (signals of earlier-than-expected rate hikes from the Fed) to the absurd (Elon Musk’s tweets). Seasoned Bitcoin investors may intuitively know how to roll with these punches. But the Bitcoin-curious, who are just one more conversation with their crypto-enthusiast friend away from diving in, should ask themselves if they’re really prepared for the full monty.
What’s Going on with Bitcoin Now?
Bitcoin hit its all-time high in the middle of April after Coinbase, one of the biggest crypto exchanges, decided to go public.
That positive momentum followed months of positive developments for the crypto world. Tesla announced it would accept (and hold) Bitcoin, financial institutions like BNY Mellon and Fidelity made big deals out of giving their clients easier access to crypto funds, and behemoth payment processor Mastercard said it would facilitate transactions. El Salvador has even begun to accept Bitcoin as legal tender.
But the porch light can’t burn forever. Since the ides of April, Musk has soured on crypto thanks to renewed attention to its dire environmental impact while China has clamped down crypto mining in many of its regions.
The recent Colonial Pipeline hack renewed Congressional attention to how criminals use Bitcoin to extort well-heeled corporations. (These specific criminals, though, were not terribly sophisticated, and the Feds ultimately recovered much of the digital loot.)
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