Bitcoin continues to fall. At the time of writing, the world’s number one digital asset has fallen below the $42,000 range, meaning it’s at its lowest point in months, and yet, according to some sources, this may not be a bad thing.
Bitcoin Has Dropped, but There’s a Possible Good Side to This
While at first, it’s perfectly natural to get completely concerned about the price of bitcoin and the direction the currency seems to be taking, it has been stated that a drop like this in bitcoin’s price means the currency is likely becoming more mainstream. BTC is now at the lowest it’s been since September and has incurred a near 40 percent drop since its November high of roughly $68,000. However, this could be because it’s beginning to correlate with more assets as additional investors enter the fray.
Bitcoin is also joined by assets like Ethereum, which is trading at its lowest point in roughly three months. The fall in crypto prices succeeds several drops in tech stock prices and a discussion amongst Fed members that may see the country hiking interest rates and ending bond purchases for some time.
Matthew Tuttle – chief executive at Tuttle Capital Management – says this is not something investors should worry about too much. This is a positive sign, and one that suggests bitcoin is joining a more mainstream investing market. He says that when the trading arena is weakened, risky assets tend to fall first. Right now, cryptocurrencies stand amongst the riskier assets available, along with beta stocks and similar investment tools. He says:
When bitcoin is rallying, you know, alright. Investors are willing to take risks. When bitcoin is selling off, that a lot of time tells you [that] investors are scared. They’re not willing to take risks right now.
With so many people and institutions alike getting more involved in crypto than ever, it appears the currency is becoming more mainstream. This could be the reason for its recent fall according to Adam Grealish, the head of investments at financial technology company Altruist. In an interview, he states:
We’re continuing to see crypto move out of the niche early adopter phase. There’s a broader base of folks adopting it, which means there are going to be less idiosyncrasies in the market.
Broadening Its Horizons
What this means is that if a small group is trading an asset, that asset is likely to move based on what is occurring within that group and nothing else. However, if more people get involved and the asset tends to become more mainstream, it’s going to tie in and correlate with many of the other risky assets these investors own.
Many analysts say that risky assets like bitcoin should be long-term investments, and thus individuals shouldn’t panic over every price change as these changes are likely to be common.
Source: https://www.livebitcoinnews.com/bitcoin-is-dropping-but-this-may-not-be-a-bad-thing/