Bitcoin Makes a Comeback
This year has been nothing short of tumultuous for cryptocurrencies in the market, as the highs and lows have kept investors on their toes for the best part of the year. At the end of July, Bitcoin’s price rose by 7.5% over eight days, to breach the $40,900 mark for the first time in almost six weeks, and sending a clear message to the markets that Bitcoin is not going anywhere anytime soon. Let’s take a quick look at some of the peaks and valleys that the world’s biggest coin has experienced in 2021.
Starting out strong
After starting the year off well below the $40,000 mark, Bitcoin’s price hit a massive all-time high in April of over $63,000. This came off the back of Tesla’s major $1.5 billion investment in Bitcoin and subsequent announcement that it would be accepting Bitcoin as a payment method. Other factors behind Bitcoin’s rise included investments from big Wall Street players like Goldman Sachs and Morgan Stanley, along with billionaire celebrities like Elon Musk and Mark Cuban punting Bitcoin openly, plus the release of Coinbase’s IPO. This peak was a monumental moment for both Bitcoin and cryptocurrency in general, as the world saw its importance and solid place in the financial markets.
Hitting a rough patch
What goes up must come down, even in the crypto markets, and by June, Bitcoin prices had hit a low of $28,908 which was a 42.3% drop from the coin’s intra-day high in May, and a 6% decline for the month of June. Why the drop in price? Several reasons. First, Tesla’s initial announcement of its acceptance of Bitcoin as a payment method was short-lived as Tesla changed its mind and decided not to accept Bitcoin—to the detriment of Bitcoin prices. They cited the negative environmental impact of Bitcoin mining as the reason for the change of heart, which led to a greater impact on both Bitcoin and other cryptocurrencies. Also, China’s crackdown on cryptocurrency, particularly crypto mining, took a huge toll on Bitcoin prices earlier this year and could continue to do so going forward. The tightening of restrictions in the country make it impossible for Bitcoin mining to continue, and Chinese financial companies have been warned against offering any services related to crypto. A wider sell-off in the markets also drove a drop in crypto prices, according to Annabelle Huang, partner at cryptocurrency financial services firm Amber Group, who said, “There’s been a broad sell-off in global markets, risk assets are down across the board.”
Making a comeback
Recently, there have been positive comments from the likes of Elon Musk and Cathie Wood from Ark Investment Management LLC, with regards to Bitcoin and its comeback. The popular crypto gained some serious momentum over July when it topped $40,000, to show the world that it’s not down and out, and even amidst China’s crackdown, Bitcoin can still rise. In fact, Bitcoin experienced the longest period of price increases since December 2020 with an eight day streak, which marked July as a turning point for the king of crypto this year. The recovery comes after Elon Musk hinted at Tesla agreeing to accept Bitcoin as a payment method again, now that the crypto is making moves towards using renewable energy sources for mining coins. This move from Bitcoin has alleviated a lot of the uncertainty that was gaining traction in the markets around the environmental impact of crypto mining, which in turn can impact prices. Along with this, the concerns around China’s restrictions have also eased, allowing further investment in Bitcoin and helping to boost prices. Analysts are watching and waiting to see if Bitcoin can rise above the $50,000 mark with its current momentum anytime in the near future and get back on track towards its earlier highs, however this remains to be seen.
Crypto trading as CFDs
Bitcoin has certainly experienced some extreme highs and lows this year, but such volatility is typical for cryptos. In fact, it presents both opportunities and risks for those who engage in crypto trading as CFDs, or Contracts For Difference. CFDs allow you to take advantage of price changes in both directions—increases as well as decreases—of a number of cryptos like Bitcoin, without having to purchase the underlying asset.
Disclaimer: Blockmanity is a news portal and does not provide any financial advice. Blockmanity's role is to inform the cryptocurrency and blockchain community about what's going on in this space. Please do your own due diligence before making any investment. Blockmanity won't be responsible for any loss of funds.
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