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"The rise in bitcoin to 64,000 was so fast that there is hardly any support in the fall"

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What is happening with Bitcoin? It is the big question of the market, especially among inexperienced investors in cryptocurrencies, who have bought the crypto currency in recent months and have panicked at it. brutal cut of about 40% which has accumulated since the historic milestone at nearly $ 65,000 in mid-April. "The reality is that nothing very different from what has been happening whenever there are large increases in price, they are usually followed by a period of high volatility and strong cuts”, Replies Javier Rivas, professor at EAE Business School.

The rise from $ 20,000 to $ 64,900 “has occurred in such a short time (since November 2020) that there have hardly been any pauses that would have meant supports in a fall, "he says. In addition, “the latest increases have attracted a investor profile with little knowledge in cryptocurrencies that, not used to these sudden movements, have been leaving the market especially during the last weekend ”.

“From a technical point of view the key point is $ 28,000, the main support level, if the market loses it, it will even endanger the breaking of the previous highs ($ 20,000) ”, comments this expert who also describes other causes as catalysts for the carnage.

“Above all Elon Musk statements and tweets, if he first claimed to accept bitcoins to pay for his Tesla cars to back down shortly after. Its justification has been the high electricity consumption of mining the cryptocurrency ”. He does not deny that "this in itself is already a devastating criticism", not because of the simple fact that bitcoin consumes as much electricity as a country the size of Norway, "but because of the enormous difficulty of changing the processes that explain such high spending electricity in a decentralized system without central authority ”.

OTHER CATALYSTS

In addition to the above, this Tuesday, three Chinese organizations from the banking and payments sector issued a statement in which they warned financial institutions that will not conduct business related to virtual currencies, including trading or exchanging fiat currency for cryptocurrencies.

China's hard line on digital currencies is not new. In 2017, authorities shut down local cryptocurrency exchanges and banned so-called initial coin offerings (ICOs), a way for companies in the sector to raise money by issuing new digital tokens.

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