The plunge of the world’s largest cryptocurrency by market cap, bitcoin, wiped out millions of dollars from the crypto market earlier this week. RT’s Boom Bust digs into the reasons behind the steep drop.
After a strong start to 2021, when we saw bitcoin breaking records on a daily and even hourly basis, the price of the cryptocurrency has faced wild swings. On Friday, it plunged below $30,000 for the first time in nearly three weeks, but recouped some of those losses since then and was trading at around $31,900 on Saturday.
“There are a few reasons why bitcoin dropped so heavily, so suddenly,” Christy Ai of RT’s Boom Bust explains. “Firstly you have the options market that was already getting overheated… Secondly, we have critical resistance level error of the 35,000 rejected again for the third time,” she said.
Most of the panic sell-off came from leveraged traders, who caused a domino effect in the market, Christy Ai noted. She further added that larger investors may still see the recent price fluctuations as a buying opportunity, while more and more big players on Wall Street are flocking to bitcoin to use it as a hedge against massive stimulus measures.
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