On Jan. 21 the cryptocurrency market experienced an increased wave of selling pressure and within the last hour Bitcoin BTC price dropped below the 30,000 mark for the first time since Jan. 4. Now that Bitcoin has lost the 32,000 and 30,000 support, a growing number of analysts are suggesting that the price could retest the 24,000 support. One theory behind the dip suggests that institutional investors viewed Bitcoin as a crowded trade and decided to take profits.
As reported by Cointelegraph, Scott Minerd, the Guggenheims chief investment officer, recently suggested that the price of Bitcoin has likely put in a top for 2021 and could see a retracement back toward the 20,000 level. JPMorgan strategists John Normand and Federico Manicardi also warned that investors using BTC as a portfolio diversifier are putting themselves at risk as Bitcoin is more of a cyclical asset than a hedge.
This note of caution seems to have been well timed given todays show of volatility. Although selloffs can be painful for investors who are overleverged, taking a closer look at some of the social activity that occurred during the downside move hints that the current volatility might not be a macro trend change.