Examining The Early January Bitcoin Market Drop and Its Effects on Bitcoin Price

    Bitcoin price dropped to $43,030 from a peak of nearly $47,700 on January 1, 2021. Other famous crypto tokens, including Ethereum, Solana, Cardano, Binance Coin, and others, look to be on the free slide at the beginning of the year.

    Even though Bitcoin price was about $50,000 just over a month ago, cryptocurrency prices all collapsed on Wednesday, January 5. As traditional and crypto markets grapple with the impact of coronavirus on global economic recovery, fears of US interest rate hikes and the impact of protests and political turmoil in Kazakhstan on the country’s significant mining operations appear to be the forces driving the initial dip in Bitcoin’s price. On Monday, January 10, Bitcoin’s price fell once more, returning to a $40,000 support level among crypto traders as investor confidence dwindled.

    Bitcoin price has been primarily fluctuating between $45,000 and $50,000 over the last few weeks, reaching a recent high of $52,100 on December 27. At 10.30 p.m. on Wednesday (January 5), the major cryptocurrency’s price plummeted below $45,000 to $42,500, with the rapid drop in the cryptocurrency’s price mirrored by a drop in Ethereum’s price.

    Bitcoin’s recent gains of about $15,000 have been wiped off the board after the main cryptocurrency came the closest it has ever come to surpassing a new record threshold of $70,000 in November.

    In early November, Bitcoin price rose sharply to near $70,000, as investors anticipated to see the cryptocurrency’s $1 trillion market cap hold solid ahead of a tumultuous trading period. However, in late 2021, it fell below $50,000 as US and UK markets had to deal with increased concerns over Covid-19, the Omicron version, and excessive inflation.

    Overview Of Bitcoin and The Early January Market Drop

    Satoshi Nakamoto, an unnamed individual or group, founded Bitcoin in the aftermath of the 2008 global financial crisis. It originally started trading in 2009, and pricing data from the early days is scarce.

    As institutions and retail investors became more involved with the crypto market and its associated initiatives as a result of the Covid-19 outbreak, Bitcoin became more popular. Riskier assets, such as stocks and digital assets, have fallen as the Federal Reserve has been more hawkish.

    The joy of retail Bitcoin investors was dealt a major blow by plummeting cryptocurrency prices. However, the negative price fluctuation in crypto markets is nothing new, thus committed crypto enthusiasts are unsurprised.

    Since the beginning of December 2021, Bitcoin has generally been range-bound. The current price reduction, on the other hand, could be ascribed to the general market uncertainty.

    The present Bitcoin price dip can be related to the uncertainty that all markets are experiencing as a result of the Omicron variant’s spread. We may expect two quite different things to happen at the same time: many investors will see this as an opportunity to purchase the drop, while others will try to cut their losses, resulting in a sellers’ frenzy.

    While regular investors have been hesitant to participate in cryptocurrency, institutional investors have been growing their holdings. Microstrategy, for example, took advantage of the price drop and purchased 1900 BTC for $91 million on December 30, 2021.

    Whales continued their buying binge as Bitcoin fell at the end of 2021, according to on-chain data. Between the beginning of December and the end of December, the number of addresses holding 1,000 to 10,000 BTC increased significantly. What this suggested was that the majority of investors are betting on Bitcoin’s capacity to return in the first quarter of 202.

    The early January drop in Bitcoin price was attributed to money flowing from retail to institutional investors. In the world of investments, there is a notion known as ‘rotation.’ Money exchanges hands between ordinary and institutional investors in every asset class, and this usually happens in cycles or after a strong bull or bear run. At the beginning of January, we witnessed money flow from retail to institutional investors. This is why the Bitcoin price dropped.

    Despite the market and price drops, experts believe Bitcoin price will remain range-bound for some time before making a significant rise to $120,000. “Whereas the move from $4K to $60K was based on retaining adoption, this move will be based on institutional adoption.

    Almost all of the leading crypto tokens returned enormous profits to retail investors by the year 2021. While the same is unlikely to happen again in 2022, industry insiders anticipate some stability in the crypto markets and Bitcoin price this year.

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