Bitcoin is up to around $57,000 Monday morning after it dropped briefly below $56,000 early Friday morning, the lowest it’s been since early October.
The drop in Bitcoin’s price the last couple weeks represents a pronounced drop from the high it set on Nov. 10 when it went over $68,000. It follows President Joe Biden signing a $1.2 trillion infrastructure bill last week. The new legislation contains a couple key provisions that could impact the tax ramifications for crypto investors.
Even after falling back from its latest all-time high price last week, Bitcoin’s current price still represents a big upswing from the low $40,000 range seen in September.
Shortly after Bitcoin’s latest all-time high last week, Ethereum marked its own new all-time high this month when its price went over $4,800. Ethereum, too, has seen a pronounced drop in value this week to $3,900.
Earlier this year, previous sudden drops followed a ban on cryptocurrency transactions and mining from China’s central bank, which in September declared all cryptocurrencies illegal in the country. After previously topping $52,000 in early September, Bitcoin’s price had dropped and struggled to get back over $50,000 until October.
Even with its recent and usual ups and downs, Bitcoin has mostly been on the rise following a drop under $30,000 in July.
Bitcoin first hit a high of more than $60,000 in April, and the ups and downs since then highlight the cryptocurrency’s volatility in a time when more and more people are interested in getting in on the action. In the weeks between the most recent July low point and its high points in recent weeks, Bitcoin has risen steadily. Again, Bitcoin is very volatile, so these ups and downs are par for the course.
We’ve talked to investing experts and financial advisors who advise against sinking much of your portfolio into the asset class for this very reason. They work with clients to make sure volatile crypto investments aren’t getting in the way of other financial priorities, like saving an emergency fund and paying off high-interest debt.
What’s Behind the Latest Bitcoin Drop?
Many investors see Bitcoin’s price swings as part of the game, but “volatility is tough for individual investors to deal with,” Noble says. Like Yang, he warns against selling too fast.
Recent price fluctuation has followed new regulatory actions by the U.S. government, as well as the new legislation pertaining to crypto in the infrastructure bill. In an industry as new and unproven as cryptocurrency, it doesn’t take much to drive big swings in price. More generally, new short-term investors who are selling their holdings in reaction to the latest drop may be contributing to the drop in Bitcoin’s value, according to a report from Glassnode Insights, a blockchain analysis firm.
While fluctuations are expected, Noble says he’s been surprised by drops earlier this year. “I thought the market was maturing and these things would be less frequent and severe. Boy was I wrong,” he says.
Some of this year’s drops have been caused by a combination of factors, Noble theorizes, from excitement about low-quality coins, to negative remarks from Elon Musk, to China’s recent crackdown on crypto services. This mix of factors has potential to make sell-offs “all the more violent,” says Noble.
He likens the drop to the stock market crash of 1987, from which the markets took months to recover. But because crypto moves a lot faster today than equities did in the 1980s, Noble says we may see a quicker recovery.
“Don’t panic and puke,” Noble says. “If you keep your positions small, you can try to tolerate the volatility.”
Why Gala Games(GALA) ignoring corrections across the top cryptocurrencies?
Gala Games’ in-house currency GALA rallied by nearly 350% in November, ignoring corrections across the top cryptocurrencies, including Bitcoin (BTC). Notably, GALA price surged from $0.09 to $0.48 between Nov. 1 and Nov. 22.
GALA’s gains came primarily in the wake of a price rally across a majority of gaming and metaverse crypto assets. For instance, MANA, the native token of Decentraland — a blockchain-based virtual world that allows users to create, experience and monetize content and applications, climbed by more than 30% month-to-date.
Similarly, SAND, the native asset of decentralized metaverse project the Sandbox more than doubled in price in November. Gaming projects, including Division Network (DVI) and Ultra (UOS), have also witnessed more than 100% growth in value.
The upside moves across metaverse and gaming tokens picked up momentum after Facebook decided to rebrand its parent company to Meta, with CEO Mark Zuckerberg admitting that they would be “metaverse” —not social media — first.
GALA, whose issuance company Gala Games builds blockchain-based games, soared to its record high at $0.489 on Nov. 22 amid the metaverse craze. Nonetheless, the cryptocurrency also showed weaknesses in its ongoing bullish momentum as it painted a dreaded head and shoulders (H&S) structure.
One of the most widely known and trusted technical patterns, H&S, appears when the price forms three peaks in a row, with the middle one, called the head, higher than the other two, called the shoulders. Meanwhile, the three peaks have the same support level, called the “neckline.”
On its shorter-timeframe chart, GALA’s p fmed the left shoulder near $0.39, corrected lower towards its rising neckline support, rebounded towards $0.48 to form the head, got pulled back again towards the same neckline, and has now been recovering to form its right shoulder top, potentially near $0.43.