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After a long period of an unprecedented surge, Bitcoin has slowed down a bit over the last few days. On Thursday the value was down to $50,440. The current price marks a drop of 6.7%. Yesterday was the fifth straight day of the token decreasing in value. It marked the longest such streak since way back in December. Per Bloomberg Galaxy Crypto Index, other major cryptocurrencies performed badly as well.
One of the reasons for this movement is the prevailing spending of the most stimulus checks in the real economy. With vaccination slowly returning everyday life to its normal state, retail readers are reluctant to invest the received amounts on markets. At the moment, the number of call options is down from the start of 2021. Even some hot early-year investments, such as GameStop or the ARK, are losing steam. The Bitcoin decline over the past few days is largely part of the trend that sees investments move away from the technology. Crypto volatility is only heightened by the fact the derivative contracts will soon expire.
On Thursday, Bitcoin fell below its 50-day average for the first time in a while. That average price has been the key level for support so far. Dropping even further below will likely deter retail traders for the time being. At the moment, the largest cryptocurrency is way below the record price it reached earlier this month. A steep decline of over $10,000 from the record price of $61,742 could be a reason for worry. Still, even with the recent downtrend, Bitcoins is up over 700% for the last year.
The token experienced a brief recovery on Wednesday. This was mainly due to the series of tweets from Elon Musk. CEO of Tesla announced that the company will accept cryptocurrency payments in the future. But, even with this spike, the most valuable digital coin is down 12% since Friday.
The recent movements once again raised the question of the viability of Bitcoin as a currency. Many financial experts feel that such high volatility will make it impossible for Bitcoin to act as currency any time soon. For the moment, it mainly remains a vehicle for speculation. In short term, the events of last week will likely lead to lower highs and lower lows constituting a downtrend for the currency.
However, a lot of traders and analysts still remain bullish on Bitcoin. They are looking at the long-term effect the stimulus package will have on inflation. Plenty of institutional investors are still all-in on Bitcoin as a way to diversify and hedge against the forthcoming inflation. In fact, may see the recent downtrend as a buy-the-dip opportunity. The whole sector is continuing to see meaningful growth as a large portion of assets is now managed by institutions. This short-term bearish trend and the upcoming expiry of the largest options can pave the way for higher highs in the future. In that case, the events of the past week will be nothing more than a healthy correction for Bitcoin.