Bitcoin prices fell today, building on the notable declines they saw the day before.
The digital currency fell below $35,400 today on TradingView, when it hit its lowest point since February.
The cryptocurrency then rallied slightly, climbing to around $36,400, according to additional figures from TradingView.
Since then, the digital asset has seen modest volatility, trading near $36,000 at the time of this writing.[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]
A myriad of price drivers
When explaining bitcoin’s latest price movements, analysts cited several factors, including potential investor capitulation and the significant correlation the digital currency has had with other risky assets lately.
“Digital assets are moving alongside other risky assets as volatility continues to be an issue,” said Martha Reyes, head of research at Digital Asset Prime Brokerage and Exchange Bequant.
Tim Enneking, managing director of Digital Capital Management, also spoke about this development.
He pointed out that when bitcoin prices fell yesterday, there was a “huge decline” in fiat markets, particularly US equity markets that trade during Eastern Standard Time, “coupled with the correlation Very high BTC with fiat markets.”
Several analysts have spoken of a potential capitulation, meaning robust selling activity that helps drive down asset prices.
Panic selling is often the cause of this type of activity, as investors lose hope that their assets will appreciate in value.
JJ Kinahan, vice president and chief market strategist of the financial network tastytrade, commented on the situation.
“As we continue to see Crypto, in line with stocks having a second day of losses, this reminds me of a few quick points,” he said.
“The first is yes, there could be a sellout in the market,” Kinahan said.
“However, there is something that I believe is more important here, and that is that we are seeing a ‘lack of buyers’ overall and so it may not be a deluge of sellers as much as ‘There’s not a lot of conviction in buying,’ he claimed.
“This is particularly interesting in Bitcoin, as many have seen it as a place to turn in times of uncertainty and inflation, similar to what many have traditionally seen as gold.”
Reyes also weighed in on what she described as a market capitulation, but offered a different take on the situation.
She focused on investors’ use of debt, highlighting how much the global financial system has come to depend on it.
“The economy has never been so leveraged,” Reyes said, saying that as a result, “we are hostage to historic bond moves and risks remain.”
“Crypto traders bought the fake rally on Wednesday,” she said.
“Open interest rose but then sold off the next day when markets sold off,” the analyst noted.
“However, we’ve seen moments of worse capitulation in previous corrections, so we wouldn’t say we’re out of the woods.”
Disclosure: I own bitcoin, bitcoin cash, litecoin, ether, EOS, and sol.