BTC Price Tumbles to $30k, Will Bitcoin Go Back Up?
The whole crypto market is cooling down quickly following the big drop on Jan.11. Most altcoins saw their prices dump by over 20% as the BTC price tumbled from $42k to $30k in 24 hours. ETH, the second-largest cryptocurrency, was down nearly 20% to $1,060. Will this indicate a trend change? And will Bitcoin go back up again?
The shift was unexpected by many as the BTC price reached a $42k all-time high on Jan.8. After going between $39k to $41k range for a few days, many analysts are starting to see a break of $45 in the near future, until the sharp correction on Monday.
The big price correction led by Bitcoin resulted in about $3 billion worth of futures contracts being liquidated on major exchanges like Binance, OKex and KuCoin. While the total crypto market capitalization crashed by 25%, crypto exchanges saw a 50% growth in terms of 24h trading volume.
How will the $9K Bitcoin price drop impact the token’s future trend as well as the entire crypto market? It is worth noting that 20% decline is not considered significant in the crypto space, not to mention that the daily average volatility of Bitcoin is close to 4%.
After the nearly 50% decline on Mar 12, 2020, Bitcoin has seen an unstoppable upward trend without any prominent correction. So it is absolutely normal for the 20% price crash earlier this week after a almost 11x rally.
As the biggest cryptocurrency, Bitcoin has once entered the top five companies by market cap according to the data from CoinMarketCap and Companies Market Cap when its price passed $40k this month, beating the market cap of Chinese Internet giant Tencent and American electric vehicle and clean energy company Tesla. Given an asset of this size, Bitcoin’s price has been growing affected by the buying from large institutional investors like Greyscale.
Unlike the last bull cycle starting in the second half of 2017, in which the market growth was driven mainly by the FOMO sentiment of retail investors, the latest bull run has been largely attributed to the traditional financial institutions, who are rarely affected by the market sentiment, but making investment decisions based on value discovery.
Seen as the “digital gold” by the public, Bitcoin has proven its value as a potential safe-haven asset against the upcoming greater inflation all over the world. In a recent research report by JPMorgan, it predicts that BTC will hit $146,000 in the long term as it overtakes more shares of gold as a better hedge option.
So will Bitcoin go back up? In a long-term bullishness of any tradable assets, short-term correction is always welcomed and inevitable. Such correction could help squeeze bubbles and allow long-term investors to enter with a lower entry price.