Bitcoin’s big selloff was a long time coming: Investors decode crypto’s massive slump

Bitcoin has rewarded investors with massive profits all year round, but now the cryptocurrency’s famous volatility is back.

The token fell below $ 50,000 on Friday for the worst week in nearly two months as a proposed tax hike for wealthy Americans aggravated the industry sell-off.

While the digital token is known for its large volatility in price, this latest battle after the all-time high on April 14th was particularly impressive.

Speak to investors and analysts nonetheless, and many will say it took a long time – with last week’s rally in the satirical Dogecoin and the staggering valuation for Coinbase Global Inc. showing clear signs of market foam.

Bloomberg

Here’s What Market Participants Are Saying About The Crypto Slump. Comments have been edited and compressed.

Ulrik Lykke, managing director of the crypto hedge fund ARK36
“In April the markets were slightly overheated due to a large number of margins and leveraged traders. This caused a startup and the correction was only to be expected. Additionally, the fear of traders and the general emotional nature of the crypto markets could also have played a role. “In particular, however, the price of Bitcoin has only fallen 25% from its recent all-time high, and there are reasons to believe that the overall trend will remain bullish unless the price falls below $ 40,000.”

Felix Dian, founder of the Crypto Investment Fund MVPQ Capital
“Looking at the previous bull cycle (2016/17), there have been a few cases where Bitcoin is losing momentum and falling below the 100-day moving average. This was overdue.

“We’re actually seeing record institutional family office subscriptions in our fund this month, many of whom are willing to take this as an opportunity to add more. Ultimately, a heavy buying of hands will make up for the lack of available liquidity supply for Bitcoin, creating pressure and triggering a new wave of FOMO for retailers below. ”

Jeffrey Halley, Senior Market Analyst, Asia Pacific, OANDA
“The threat of regulation, either directly in developed markets or indirectly through the tax official, has always been Crypto’s Achilles heel.

Hopefully we’ll hear as many ‘experts’ say this is a sign that Bitcoin will become a ‘mainstream mature asset’ if it falls 10% this weekend as we do if it goes up or down a crypto exchange decides to go public. In the meantime, don’t hate me for being bearish bitcoin in the short term. ”

Nikolaos Panitgirtzoglou, strategist at JPMorgan Chase & Co.
“Indeed, institutional demand has slowed. I’m not sure what could trigger a renewed acceleration in institutional demand. They either need a big announcement like Tesla or simply a fix and remove the foam in retail to motivate institutional investors to re-enter the market. ”

Philip Gradwell, chief economist at Chainalysis, a crypto research firm
“The Coinbase list was the end of the beginning for Crypto. What do such price movements mean in the first week of a new phase? To be honest, I don’t think they mean that much.

“Prices are still historically high and the weekend drop appears to have been a fairly normal reversal after the spike prices exacerbated by three factors. First, the liquidation of a record number of leveraged bets. Second, there had been a build-up of bitcoin on the exchanges, which is typical when people wait to see whether the price will continue to rise or reverse. When it was reversed, these owners likely sold out quickly. Third, it all happened in an illiquid weekend market that appeared to have relatively few buyers. ”

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