B itcoin suffered a steep drop in recent trading, showing that the world’s largest cryptocurrency hasn’t shaken its tendency for big drops despite continuing to gain acceptance within the mainstream financial world.
Topic
Volatility
INSIGHTS
May 26 2024
Bitcoin
Data from Coin Metrics shows bitcoin was trading above $72,000 late Thursday night before falling to about $67,000 on Friday, a decline of roughly 7%.
- The price had rebounded to about $68,900 on Friday afternoon.
- It was not immediately clear what caused the drop in bitcoin, but the nature of volatility has never changed.
Bitcoin ETFs
Bitcoin is still up about 60% year to date. The cryptocurrency has climbed over the past few months, in part due to anticipation and then demand from the new bitcoin ETFs that launched in the U.S. in January.
Some analysts think it’s a healthy move, because they are removing some of the leverage that has built up in the system.
Bitcoin’s history
Look back bitcoin’s history, rapid rallies and steep drops have been a recurring feature. In its previous bull market, bitcoin surged above $68,000 in November 2021 but was trading below the $20,000 mark roughly a year later.
Crypto optimists say that the volatility of the asset class should decline as bitcoin matures. The advent of the bitcoin ETFs, which makes it easier for a wider swath of investors to gain exposure to crypto, could in theory help reduce that volatility.
