Increased interest rates, regulatory authority challenges, and SpaceX write-downs have driven down the Bitcoin price, worsening the outlook within the crypto community unfortunately. In my opinion it has been quite an unusual summer, but I am glad that I see old community members are getting back on track. Despite the unusual quite summer in crypto, this week, Bitcoin amongst other crypto currencies has taken a hit I the wrong direction. Easier said; When Bitcoin falls, everything fall!
Image source: The Economist.
According to Bloomberg Bitcoin dropped over from over $4000, from $29,000 to $25,000 in just a 24-hour period, yaiks… On Thursday, the price fell by 7.3 percent during the trading day on Wall Street, but it's still 60 percent higher than the level at the beginning of the year. Ethereum, the second largest crypto has also suffered significant losses since Thursday. Both Financial Times and Bloomberg point to rising bond yields and regulatory challenges as the backdrop for Bitcoin's problems. The broader driving force behind this is that crypto assets aren't immune to the increased pressure to sell risky assets, as seen in other asset classes.
In recent months, the price of Bitcoin has hovered around $30,000, trying to get back on track from the challenging year of 2022. Activity and liquidity in the crypto markets have been impacted by U.S. regulatory authorities cracking down on exchanges like Binance and Coinbase. Bloomberg also notes that worsening economic prospects in China could make assets like cryptocurrencies less attractive. If the decline in global risky assets continues, Bitcoin could drop further.
The Wall Street Journal also reported on Thursday that Elon Musk's SpaceX had written down the value of its Bitcoin investments. In 2021, the company wrote down values of $373 million and sold off holdings. So, when a whale sells of and its Elon then the price will drop and when it drops other investors are liquidated and we get even a greater decline in the Bitcoin price. Musk is also considered a significant person in crypto, and Tesla has even flirted with the idea of accepting payments in Bitcoin. History shows that the market often reacts strongly to Elon Musk's actions, implying that the recent announcement could further dampen investor sentiment.
Well, well, this is what we know for now, but I am as always super happy when I see the price of Bitcoin drop… Because for me this means it is time to accumulate even more BTC.
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