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The situation on the market has been unstable for more than 10 days. Bitcoin got its maximum too easily and needed to be confirmed by testing support levels
Alas, the bulls failed to hold positions. There was a desire to cash out profits, literally turning the head of new millionaires. Social networks have sunk photos of new cars, houses, which investors have purchased and suddenly collapsed on their wealth.
This means that money was withdrawn from the game, which could have been reinvested in another scenario. Moreover, many spent not only profits, but also part of their investment portfolio. All this flooded the market with free cryptocurrency and led to a decrease in demand.
Within a couple of months, the number of new addresses in the Bitcoin blockchain and the number of requests to Google Trends increased. Beginners actively bought cryptocurrency on the wave of high.p. They hurried to get rid of it as soon as the price began to fall.
There were also external factors, which we have already written about today. IRS crusade against Binance, rising inflation in the U.S....
In today's collapse of Bitcoin, there is a partial fault of Elon Musk. His speculative posts about cryptocurrencies have increased interest to the level of high-tech. Then last week, there was information about Tesla's refusing to accept Bitcoins. And about the losses incurred by the company due to the decline in the value of the first cryptocurrency.
Against this background, quite naturally, rumors spread that Tesla sold all the digital assets available in reserve. These rumors were based on the sharp growth of free cryptocurrency on exchanges. They, in fact, were also warmed by Musk himself, evasively responding to the tweets of alarmed crypto-enthusiasts.
This was enough for the cryptocurrency to lose $6,000 in a couple of hours over the weekend. The price of Bitcoin fell from 48 to 41.6 thousand. Then Musk denied on Twitter the fact of the sale, and by Monday the price had recovered to 44,000 dollars.
As Elon Musk reverses his #Bitcoin sentiment, we observe new entrants panic selling and hodlers stepping in to buy the dip.— glassnode (@glassnode) May 17, 2021
This is a historically significant correction that is testing $BTC hodler conviction.
Read more in The Week On-chain👇https://t.co/g8yPbizGbB
But why did Bitcoin continue to fall? Just because of weak hands? Or is there another, more global reason? It seems that many new investors who came to the cryptosphere in the bull market 2020-2021, were disappointed by the dynamics of price growth, negative news background associated with the ban on trading in China and India. They were also alarmed by the speculative component of Bitcoin, which manifested itself in early 2021, when the cryptocurrency sharply went into growth.
Same tweets by Elon Musk. If one person has such an influence on the dynamics of the entire crypto market, it is not good, and many people understand it. Today Musk is a bitcoiner, and tomorrow he declares that BTC mining is killing the planet.
This influence scares not only new investors. Such a popular person in the cryptosphere as Mr. Whale (@CryptoWhale) expressed his doubts about the feasibility of investing in Bitcoins.
#Bitcoin has lost 36% of its market value in the last month alone, which is an estimated 17 years of inflation losses.— Mr. Whale (@CryptoWhale) May 18, 2021
How do people still call Bitcoin a “store of value” when it’s speculative value is closely tied to the words of influential celebrities like Elon Musk?
Further sales could have caused the main technical indicators to shift. What started as panic sales caused a strong bearish impulse, which we are now seeing on the cryptocurrency chart.
Most analysts believe that this is not the end of the bull market. The situation will stabilise within a few weeks. Large investors can buy cryptocurrency at a low price, which is now happening on many exchanges.
Representatives of the exchange announced the outflow of BTC from the platform. This is similar to the purchase of Bitcoins by institutional investors and Bitcoin-whales.
Another scenario is also possible. Cryptocurrency can repeat the situation of 2017, and it will take 3-4 years to reach the new ATH. This is the opinion of Exante's chief strategist.
CEX analysts also have a pessimistic outlook. IO. The correction may be delayed until June. Bitcoin can test the strength of the support level of 30,000 dollars, and then will be about a month to trade in the channel 30-35 thousand dollars.
Then the cryptocurrency will return to moderate bullish growth to 50-55 thousand dollars. In any case, within a couple of weeks it will become clear where Bitcoin will move.
You can follow the price of cryptocurrency on the Binance exchange. It is the largest cryptocurrency exchange platform, providing favorable conditions for trading.