The price of Bitcoin increased its losses on February 23, as selling pressure drove the markets below $46,000 for the first time in more than a week. The cryptocurrency regained some ground after the drop, as investors second-guessed the recent market rally.
BTC hit its record high of more than $58,000 on Sunday. The decline it has experienced since then could be the biggest dive since March 2020.
The $47,000 level is acting as a support. However, the trajectory is still unclear amid significant volatility. Analysis of the buy and sell positions gave little hope of stopping losses if that level fails, with a lack of support below $46,500.
What caused Bitcoin’s such a quick drop?
Elon Musk, one of the crypto’s most famous supporters, seemed to kickstart the dive over the weekend. He tweeted that BTC and Ether’s process seemed high even though he had invested $1.5 billion in Bitcoin.
The ether price dropped by around 19% to $1,520. XRP was down about 21%. Meanwhile, Binance’s coin was roughly down by 14%.
The markets were also frightened by skeptical comments from Janet Yallen, Treasury Secretary, on Monday. She called Bitcoin extremely inefficient and highly speculative. She expressed concern about potential losses that investors could suffer since it can be extremely volatile.
What do analysts think?
However, for analysts, even the prospect of a more severe setback is nothing to fear. They say that Bitcoin has already experienced price drops in 2018 and 2019. Compared to them, the current decrease is nothing.
If the bears were to take hold, analysts believe Bitcoin could have classical behavior for March, which traditionally sees corrections.
Pankaj Balani, a chief executive of crypto derivatives exchange Delta, stated that the downward correction in bitcoin and other cryptocurrencies had been coming. He said that some leverage had been cleared. However, the volatility should persist for a few sessions. It will produce consolidation in BTC and ETH prices before the next move up.