The price of bitcoin lost 10.2% of its value over the weekend. This was after experiencing four days of tumbling prices and deepening losses. The cryptocurrency was changing hands for around $36,000 on May 6. This fall in value puts the largest crypto at its lowest level since July 2021.
The price crash actually wasn’t just experienced by the crypto markets, coinciding with a downturn in the broader financial markets, which has rippled across to other leading cryptocurrencies like Ethereum and Solana.
The overall crypto market is now worth less than $1.5 trillion, after losing more than half its all-time high last November.
Analysts cannot agree that the latest collapse is part of a longer-term bear trend, or just a temporary dip in what has been an exceptionally bumpy year for bitcoin.
‘Slow motion meltdown’
“We’re seeing a slow motion meltdown, partially because it’s mostly been long holders selling” instead of levered liquidations, said Josh Lim, head of derivatives at New York-based brokerage Genesis Global Trading. “Now that some corporate treasuries are hovering near their cost basis, markets are waiting and watching to see if shareholders will force some de-risking.”
Michael Novogratz, the billionaire cryptocurrency investor who leads Galaxy Digital Holdings Ltd., warned that he expects things to get worse before they get better.
“Crypto probably trades correlated to the Nasdaq until we hit a new equilibrium,” Novogratz said on Galaxy’s first-quarter earnings call on Monday. “My instinct is there’s some more damage to be done, and that will trade in a very choppy, volatile and difficult market for at least the next few quarters before people are getting some sense that we’re at an equilibrium.”
“We’re watching carefully to see how the market fares over the next 24 hours,” Steven Goulden, senior research analyst at crypto market maker Cumberland DRW, said in an email. “Including whether mechanisms being introduced to help increase reliance, such as LFG lending out Bitcoin to OTC trading firms, will be enough to hold in times of deep stress or if we need additional stabilization mechanisms.”
The case for property investments strengthens as Bitcoin falters
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