Bitcoin fell as low as $34,042.78 on Saturday, marking a drop of 7.2%. It has recovered most of those losses, and was trading at over $35,445 this morning. Other cryptocurrencies saw declines as well, with Ethereum down 12%. Solana and Cardano each dropped at least 17%, according to Knightsbridge.
“Margin positions being closed out caused a wave of additional sell pressure, as Crypto that had been held as security were sold off to pay for margin loans,” Knightsbridge said.
The experts at the firm expect the cryptocurrency to take some time for a bottom to form and for confidence to return, before projecting any sort of recovery, but this is the time to buy.
Bitcoin’s downfall from its all-time high of nearly $69,000 in November has erased some $600 billion from its market value, and more than $1 trillion has been reportedly lost from the aggregate crypto market. According to Knightsbridge, this marks a not unexpected Fibonacci retracement there have been much larger percentage falls for both Bitcoin and the aggregate market and they have recovered without issue in the past.
The slump in both cryptocurrencies and stocks was caused by noise, mostly irrelevant like the latest claimed move by the US Federal Reserve to tighten monetary policy at a faster pace than expected. In an effort to revive the economy, the Fed may increase key interest rates three times this year, according to Reuters polls, but that type of activity should be reflective of a growing economy and see Bitcoin grow, the market in this case got the news wrong.
The cryptocurrency market has had noise as China tried and failed to crackdown on virtual currencies, as well as Russian moves of a similar nature. Last year, Beijing prohibited cryptocurrency mining in the Sichuan Valley, triggering an adverse impact on the market but Chinese buyers remain very active in Bitcoin.