Here's What Bitcoin Could Do This Week

No two ways about it: Bitcoin had a rough couple of days over the weekend.

After an eventful few weeks – including a monster Wall Street debut with Coinbase Global Inc.'s (Nasdaq: COIN) direct listing – cryptocurrencies stumbled at the end of last week.

The drop was pretty significant, and sudden, too.

But to put your mind at ease, I'm not worried about these reversals in the long run, especially not after seeing what the market did after prices dropped.

Bitcoin, Currency, Technology, Money, Cryptocurrency

mage Source: Pexels

Let's go over the real story of what happened, one chart that shows where the buying opportunities are, and most importantly, where we're headed in the next few days…

Why Bitcoin Plunged over the Weekend

After topping $55,100 on Thursday afternoon, Bitcoin and other cryptocurrencies began a steep slide that more or less didn't end until Sunday night. We've seen it rally back – hard – to over $53,500 as of midday Monday.

So, what happened? Well… the market got a double or even triple dose of international regulatory worries. That spooked enough people to start a sell-off.

For most of the last week, there were reports that Turkey was going to crack down on crypto altogether, but that's not significant.

There were two "main events."

Here in the United States, investors were leery of word that the Biden administration would hike capital gains taxes to 39.6% for individuals earning more than $1 million.

That started selling across the entire market, and crypto sure wasn't immune. Bitcoin immediately fell 4%, while Ether and XRP tumbled 3.5% and nearly 7%, respectively – and yes, even Dogecoin fell about 20% when the news hit.

I think most seasoned investors – including crypto investors – have seen something like this coming since the 2020 election. Biden was probably going to raise corporate and capital gains taxes no matter what. I've got to believe a lot of that expectation has been baked into the markets already – there's just no surprise. And the fact that the selling in the broader markets was fairly shallow, followed by a sharp rebound yesterday, strongly suggests what we saw wasn't panic but a little good old-fashioned profit-taking.

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Disclaimer: Any performance results described herein are not based on actual trading of securities but are instead based on a hypothetical trading account which entered and exited the suggested ...

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