Bitcoin is still in a stretch of double-digit intraday moves after briefly halving its value last week, and Wall Street strategists say this crazy run won’t be over anytime soon.
It’s been a rude awakening for bitcoin investors who thought they could handle the crypto volatility. The world’s largest cryptocurrency suffered a 30% one-day drop last Wednesday, falling to about $30,000 apiece from its record high of $64,829 in mid-April. The turbulence was dramatic even by crypto’s standards. The last time bitcoin saw a decline of this magnitude was March 2020 at the height of the pandemic. And even then, the trading wasn’t as jarring.
Bitcoin has experienced 14 down days in May alone, according to Coin Metrics. So far this year, there have been 39 days with daily swings of 5% or more in either direction, based on bitcoin’s closing prices. There were 42 such days in all of 2020.
While the digital token bounced back rapidly with the price up more than 10% above $38,000 on Monday, heightened regulatory pressure as well as its technical picture is pointing to more wild trading ahead, strategists said.
“The drubbing that cryptocurrencies have received over the past two weeks is just a taste of things to come,” said Peter Berezin, chief global strategist at BCA Research, in a note. “Crypto markets will continue to face tighter regulation… In the near term, the pain in crypto markets could drag down other speculative assets such as tech stocks.”
The recent fluctuations came amid elevated regulatory scrutiny in the U.S. and abroad. The U.S. Federal Reserve will soon release a paper outlining its own research into the central bank digital currency area. Meanwhile, Chinese authorities have vowed to crack down on mining and trading of the cryptocurrency.
Elon Musk, a proponent of cryptocurrency, also did a sort-of 180 on bitcoin when he announced the electric carmaker had suspended vehicle purchases using the asset, citing environmental concerns over the so-called computational “mining” process.
“Bitcoin remains comically volatile,” said Adam Crisafulli, founder of Vital Knowledge. “The economic utility of nothing shifts this rapidly.”
Bitcoin’s 31.1% intraday decline was the fourth largest drop on record, according to data from Cornerstone Macro.