Bitcoin Hit $57000 and keeps dropping. Why?

Bitcoin Hit $57000 And Keeps Dropping. Why
Post Menu and Details.

Words: 938

Reading time: ~4 minutes

Bitcoin is one of the most renowned cryptocurrencies across the world. It has made its way into the mainstream by attracting individuals, organizations, and governments. Slowly and gradually, it is being accepted by top companies and businesses. Bitcoin’s price was always an excellent issue for the general public as its market is highly volatile, and people scare to invest or accept it.

Last year in 2020, the cryptocurrencies like Bitcoin have made excellent progress in their price and become the only largest cryptocurrency to hit the price repeatedly. Plenty of new Bitcoin price records have been set in 2021.

In 2020 and starting 2021, bitcoin’s price reached heights as in Feb 2021, the value of a bitcoin was around $57,000, which has even excellent the price of a gold bar of 1Kg. Such a price rise has claimed that bitcoin is a new investment asset that will secure a future place.

But as we know, bitcoin’s market is volatile and what followed after a price increase is what the crypto analysts and investors never want to see, which is a fall down in price by 9.45%. Currently, bitcoin’s trading price is around $48k, which has made investors panic because once the price of bitcoin starts to drop, it drops a lot. If you want to trade bitcoin, you can download the and learn about bitcoin trading.

Undoubtedly, after reaching an incredible level, none of the users wanted to see a fall in price. However, the market has seen some correction cycles, showing signs of recovery of around 17%. Bitcoin investments are like investments in some valuable assets that are for the long-term. It is always recommended to users to buy bitcoin or invest in it by having a long-term perspective.

There might be some reasons why there is a fall in bitcoin’s price suddenly; let us understand those reasons in detail.

Week institutional demand

Crypto analysts believe that there is a high demand for bitcoin. Still, it has been studied and found through analysis that there is a weak institutional demand for bitcoin amongst potential investors. Many cryptocurrencies are introduced in the market; people prefer to invest in a less stable currency and is less expensive.

Bitcoin’s price started to decrease because it fueled a lot by enhancing demand for it amongst individuals. A few times, there were examples or situations of negative premium that could lead price to drop.

Influence of media

Media is one of the main reasons that harm the price of Bitcoin. When media coverage is more on a cryptocurrency, it will better understand it to the general public and attract new investors. Simultaneously, it has a negative impact as when there is a hack or scam that takes place, media covers it the most and presents all the negative features of bitcoin and other cryptocurrencies, which highly affects new investors.

Positive coverage will increase the price, whereas negative coverage will have the opposite effect on bitcoin’s price. Social media is compelling, and the negative news spreads faster than positive news, and it highly impacts the price of bitcoin.

Bitcoin Hit $57000 And Keeps Dropping. Why 1

Funding pressure

The market of cryptocurrencies like bitcoin is always overheated, and the people who hold long positions in the market are because of the unique features of bitcoin. Holding long positions is also referred to as funding rate, and at this time, the funding rate has been increasing, which caused excess bullish in the bitcoin market.

In January 2021, bitcoin’s funding rate started to rise more because of the disclosure of Tesla that made bitcoin investments. Bitcoin and other cryptocurrencies like XLM, LINK, XRP, and more have also suffered the price drops.

Chart driven factors

Recently there was a significant increase in bitcoin price, i.e., from $30,000 to $49,000, but it lacked support on some best crypto exchanges. Since February, the daily volume has started to decline, resulting in a fall in price that only short-lived.

Regulatory changes

Bitcoin is a completely new concept, and as it is not backed by a government or any central authority, which is another factor that negatively affects its price. Because the government isn’t involved in price regulations of bitcoin and other cryptocurrencies, it tends to imply and change regulations for taxes and record-keeping.

The general public still fears that bitcoin will ban cryptocurrencies, and in this fear, they are hesitating to invest in bitcoin. And the people who already have made investments in bitcoin are selling it because there are regulatory changes by the government that make people pay taxes for their investments. The influences of the government’s regulatory decisions on bitcoin’s price can never be disregarded, and this is another factor that causes a fall in the price of bitcoin.

What is the future of Bitcoin, and how will its price go?

Bitcoin is the most volatile crypto asset in history. While everyone is busy making history, the individuals involved in investing and trading bitcoin are doing technical analysis. The short-term forecast of bitcoin’s price helps them learn whether they should invest in bitcoin. Currently, bitcoin’s price is increasing and seems to improve, but it can drop anytime failing the investments that you made using your hard-earned money.

It is imperative to check various websites to know bitcoin price predictions and learn about the bitcoin market and factors that affect its price. However, bitcoin’s forecast saying that its price will remain around %50,000, and if it continues to grow or act similarly, there will be constant fluctuations in its price in the coming years.

It is still difficult to predict how its market will grow because various factors influence bitcoin’s price. Investing in bitcoin is easy but requires a complete understanding of the market. If you plan to invest in bitcoin, you must learn about market movements shortly.


Thank you for reading!