EC Bitcoin Catches Breath Following 7 Day Boom And Bust

Despite solid news on vaccination rates in the UK, the FTSE 100 struggled throughout last week as the potential for negative rates weighed on investors’ minds, although ‘super Thursday’ helped boost the index, with major firms Tesco (TSCDY), Boohoo (BHOOY) and Primark (ASBFY) posting quarterly results. 

Bitcoin (BITCOMP) shook off volatility and market fears from the week before, loitering around the $35,000 mark before steadily rising to $40,000 on Thursday. Ethereum (ETH-X) followed suit, shaking off its own dip below $1,000 to hit $1,238. 

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Simon Peters, analyst, eToro:

Bitcoin catches breath following 7 day boom and bust  

Instead of a tumultuous week with talks of crashes and bubbles, last week was relatively steady for bitcoin for the most part. Starting at just $30,000, bitcoin rose to $40,000 on Thursday, before dipping again over the weekend. It currently sits at $36,389.

Whilst some commentators have pointed out that, from a technical standpoint, we are currently in a bear market, I don’t personally ascribe to that view. This level of volatility is no different to what we have seen in previous bull runs, but because bitcoin is at such a substantial price, the fluctuations in dollar terms appear much more significant. In percentage terms, they are not. 

As we have outlined in previous notes, there are several reasons for the current bitcoin bull market: institutional investment, demand outweighing supply with investors hodling, and an increase in appetite from retail investors, too. The backdrop for bitcoin remains supportive and so, to myself and to many in the community, it was not a surprise to see bitcoin recover relatively easily last week from its setback. 

For many investors, the recent drop towards the $30,000 level would have represented a compelling opportunity to ‘buy the dip’. For those who didn’t, they may be looking at the recent bout of volatility with yearning and regret. Grayscale Bitcoin Trust, which recently reopened to investors, has already been diving in and hoovering up recently mined coins. Decrypt reports that the closed-ended investment fund bought 2,172 bitcoin on its first day back.

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Disclaimer: This article should not be taken as investment advice, personal recommendation, or an offer of, or solicitation to buy or sell, any financial instruments. This material has been ...

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Bitcoin Bandit 1 month ago Member's comment

Good read, thanks.