Bitcoin went crazy again this past weekend. As we enter a new week, the madness continues.
Bitcoin continued to move lower in Asian trading on Monday, and by 11:40, Bitcoin was down 12% at $33,500 per coin, a short dip of nearly $2,000 at one point; Ether was lower by more than $100 in 15 minutes, once falling below $1,010 per coin to $1,039.42 per coin. Litecoin fell more than 20% during the day and is now at $136.41 per coin.
Bitcoin fell more than 14% in the late Asian session, falling below $33,000 per coin during the day.
Cryptocurrency bursts across the network reached $188 million in the past hour and $1.239 billion in the past 24 hours.
Bitcoin has been staging frequent ups and downs since it fell below $40,000 per coin in the early hours of Saturday (Jan. 9), with the long and short sides fighting fiercely around the $40,000 mark. It staged a precipitous plunge in the evening of the 10th, diving nearly $1,000 in several straight lines while pulling up several times. As of 4:30 a.m. on the 11th, bitcoin fell wildly by nearly $6,000 during the day to a low of $34,322 per coin, before rebounding to the $38,000 mark. The rest of the cryptocurrencies also fell, with ethereum falling nearly 10% at one point. In the one-hour period ending at 04:37 on January 11, the cryptocurrency blowout across the network reached $314 million, and the blowout in the previous 24 hours reached $969 million.
Bitcoin’s crazy market is amazing! Keep in mind that Bitcoin rose over $10,000 last week and at one point approached the $42,000 mark.
There are signs that Google‘s search interest in “bitcoin” rose sharply earlier this month, and that retail investors’ demand for cryptocurrencies rose sharply out of a “fear of missing out,” leading to a surge in trading activity on cryptocurrency exchanges like Coinbase and Binance, making the platforms vulnerable to technical problems.
Just during the weekend’s round of market turmoil, Coinbase, the world’s largest cryptocurrency, also dropped offline at one point, for the second time in three days.
Zero Hedge found that bitcoin drops to $35,000 are met with a buy-low phenomenon.
The $35,000-$38,000 is also the level at which options open positions are concentrated at the strike price. So, at Bitcoin’s current levels, buying on the dips may continue to occur in the aftermarket as well.
However, it is worth noting that the world’s largest bitcoin cryptocurrency trading fund, Grayscale Bitcoin Trust, has seen a rare and significant recent outflow of capital.
JPMorgan warns that if the amount of money flowing into the Grayscale Trust slows dramatically, the probability of a bitcoin pullback will increase significantly, and a sharp pullback similar to the one seen in 2019 will be inevitable.
As bitcoin has surged, the assets under management of the “Gray Trust” have climbed from $2 billion in early December last year to $13.1 billion today. Flows into the fund are now about $1 billion a month.
In a weekend report, Bank of America described bitcoin as the global “mother of all asset bubbles” in recent decades. Michael Hartnett, an analyst at the bank, wrote in the report.
“Bitcoin has risen 180% in the past two months, and the entire digital currency market has surpassed $1 trillion in market capitalization. If we visualize the bubbles of these recent decades, Bitcoin is undoubtedly the ‘mother of all bubbles’.”
Harnett also warned bitcoin investors to be aware of several risks that could lead to a drying up of liquidity.
First, be aware of the risk of a bearish market hidden in changes in interest rates.
Second, be wary of an unexpected strengthening of the U.S. dollar.
Third, beware of inflation exceeding expectations.
Fourth, prevent the market bubble from becoming too large to scare off speculative capital.
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