Bitcoin just went through another one of its infamous mood swings, dropping $5,000 on March 5 right after setting a new record high of $69,200. This rollercoaster didn’t stop there. The cryptocurrency saw a sharp 6.7% drop in a little over an hour.
Observers, trying to keep a cool head amidst the chaos, saw this as part of the crypto cycle. Vijay Boyapati mentioned on social media that it’s typical for Bitcoin to take a step back after hitting a high, cause the big players often sell off at these peaks. This dip, though, is seen as breaking a psychological barrier, making way for what’s called true price discovery.
CoinGlass reported nearly $150 million worth of Bitcoin got liquidated during this downturn from its peak of $69,210. Despite the downturn, long-term Bitcoin holders found a silver lining, celebrating this high as a first of its kind, occurring before the halving.
Experts, like Rekt Capital, say we are entering a new phase for Bitcoin, and it is moving faster than expected compared to previous cycles. People are arguing about whether such a rapid rise before a halving is a sign of an accelerated cycle.
With its market capitalization at about $1.3 trillion, it’s a heavyweight in the $2.6 trillion crypto market. This resurgence has everyone asking, “What’s driving Bitcoin now?”
Created in 2008 by the mysterious Satoshi Nakamoto, Bitcoin was designed as a cryptocurrency for direct online payments, bypassing traditional financial institutions. Its unique blockchain technology and the mining process that validates transactions make it a secure, decentralized financial system. Its appeal? Offering a way to conduct transactions without oversight from banks, attracting those looking for alternatives to traditional financial systems, especially in a low-interest-rate environment where traditional investments are less attractive.
Despite its volatility, some see Bitcoin as a hedge against inflation, akin to gold, though not everyone’s convinced of its stability. The recent approval of ETFs tracking Bitcoin’s price signals a maturity in the crypto market, attracting more institutional investors. Yet, the crypto industry is not without its dramas, highlighted by the collapse of major exchange FTX and the legal troubles of key figures in the industry.
