- Bitcoin is trading at the $45,000 level after shedding 2.5 percent in the past day as Ethereum stays above the $3,000 level despite being in the red.
- One market strategist believes that investors are getting concerned with these drops and the two top cryptocurrencies’ inability to bounce back immediately signals market weakness.
Ever since it bottomed just above $29,000, Bitcoin has fought to stay above $45,000 and even went as high as $52,700. Ethereum, on the other hand, has managed to stay above the $3,000 level in the past month. In the past week, however, they have shed 10 and 17 percent respectively, and one market strategist believes this is spooking investors.
Of late, Bitcoin has been on the news for the good and the not-so-good. El Salvador adopted the Bitcoin Law officially this week, making it legal tender. The ol’ ‘buy-the-rumor sell-the-news’ phenomenon was rife as ever, with BTC losing 20 percent once the law took effect, but it recovered quickly.
Elsewhere, central bankers are at it again, trashing the top cryptocurrency (and all the altcoins by association). Mexico’s central bank governor compared Bitcoin to barter trade and dismissed its value as a currency. His Swedish counterpart compared it to trading stamps, stating:
Private money usually collapses sooner or later. And sure, you can get rich by trading in bitcoin, but it’s comparable to trading in stamps.
Bitcoin investors getting spooked
One analyst believes that this spate of attacks, and the corresponding price drops in the two top cryptocurrencies, is worrying investors.
Wael Makarem, a senior market strategist at trading broker Exness stated:
Investors are cautious about the current fluctuations in bitcoin and ethereum, especially as these benchmarks failed to trim earlier losses, which is usually considered a sign of weakness in the crypto market.
Makarem believes that investors are also getting concerned about recent regulation proposals. Watchdogs around the world are getting more stringent on digital currency policies as the market becomes ever bigger and attracts new entrants.
In the U.S, a new budget bill seeks to increase reporting requirements; in Ukraine, the government has recently prohibited cryptocurrency payments; and in Hong Kong, the securities regulator is working on stricter guidelines.
Speaking to Yahoo! Finance, Makarem noted:
On the other hand, the headlines from EU regulators coming closer to implementing new regulations for cryptocurrencies, new anti-money laundering rules and tax reporting requirements adds downside pressure. Investors are afraid of tough rules and regulations that could limit the adoption or use of crypto.