Bitcoin sent shockwaves in the crypto space on Tuesday after a 15% drop to $31,035 from an intraday high of $36,777. Today it seems to be recovering.
Bitcoin (BTC) price has gone up approximately 6% in the past 24 hours to trade around $35k as of the time of reporting. The asset has recovered from Tuesday’s low of $31,295.
Several factors have played out to Bitcoin price recovery, but El Salvador’s Bitcoin adoption contributed significantly.
Early today, China released data that showed that the producer price index (PPI) rose 9% last month, the biggest year-on-year increase since 2008. This increases inflationary pressures globally as China is a major worldwide buyer and seller. Additionally, the US monetary policy points to future inflation. Such news may cause many to seek bitcoin as a hedge but policymakers tapering with liquidity programs may put them off.
Notably, China is increasingly implementing tapering. This may also be the case for the US should the consumer price index, due to be released Thursday, transcends expectations. Meanwhile, El Salvador has approved bitcoin as a legal tender. Other countries such as Panama, Mexico, Brazil, Argentina and Paraguay have shown interest in following in this path despite the tapering events.
Bitcoin (BTC) Price and Historical Study
Bitcoin sent shockwaves in the crypto space on Tuesday after a 15% drop to $31,035 from an intraday high of $36,777. Some crypto analysts cautioned that the prices might approach a death cross.
The dip was due to a technical breakdown in addition to the Colonial Pipeline ransom recovery. In the latter, nearly all bitcoin ransom paid to perpetrators of the cyber-attack on Colonial last month was recovered.
According to Justin Hartzman, CEO and co-founder of CoinSmart cryptocurrency exchange, data shows that the spent-output-profit ratio (SOPR) for Bitcoin is below 1. This implies high sell-offs at losses. However, prices could further depress should Bitcoin fall below the $30,000 mark, a point that was nearly hit last month. For buyers, such a point would signify a potential entry point.
Other chartists say that the trends have taken the textbook symmetrical triangle, which points to bearish short-term prospects. More optimistic sentiments acknowledge the fall in bitcoin but that it has not reached the ‘sell’ signal.
Bitcoin’s November 2019 death cross was followed by a 5% drop a month later. However, its March 2020 death cross was followed by a golden cross two months later. Additionally, Bitcoin has lost about 45% of its value since its highest peak in Mid-April. This was attributed to critiques by tycoon Elon Musk over bitcoin’s energy footprint in addition to increased Chinese regulations.
Mati Greenspan, founder of Quantum Economics reported that a death cross is typically followed by a golden cross and so the bearish trend is a sign of a strong upcoming rally.
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