Bitcoin Bears are stalking Crypto Prices
Bitcoin is setting up for a near-term downturn that could see it shed a good chunk of its recent gains, even if the longer-term outlook appears healthy for the world’s No. 1 crypto.
That’s the view of a number of analysts after bitcoin prices BTCUSD, -5.00% breached a key technical level following the exuberance for digital assets in the wake of Coinbase Global’s COIN, -5.92% listing on the Nasdaq last week.
Bitcoin was off 1.8% late-morning Wednesday in New York, changing hands at around $56,000 on CoinDesk. That puts the crypto about 14% below its all-time peak at $64,829.14.
On 20/4/2021, bitcoin’s first time, in a 24-hour period, in which it fell below its 50-day moving average since at least 2014, after recording 193 straight days of prints above that level. Bitcoin was first created back in 2008-09.
So far this year bitcoin prices have been buoyant, up 94% year to date. By comparison, gold GC00, 0.12%, which is seen as a rival to bitcoin, is down 5.5% in 2021. The Dow Jones Industrial Average DJIA, -0.94% and the S&P 500 index SPX, -0.92% are both up around 11% in the year to date.
Bitcoin is now a trillion-dollar market thanks to an impressive rally that propelled the oldest cryptocurrency to a fresh all-time high at over $61,000. While market participants enjoy the bullish run, some industries are suffering because of the inflated price of chips.
Chips are indispensable in so many devices and industries – think about laptops, smartphones, TVs, or cars. The semiconductor industry has already been struggling with supply chain disruptions caused by the COVID-19 pandemic, the winter storm in Texas, and fires at factory sites. But Bitcoin mining is putting even more pressure on the chip market, creating an additional shortage and boosting the price of chips.
The profitability of mining depends on the cryptocurrency’s price, which has rallied for the last few months, surging well above the 2017 peak. The huge competition among miners is prompting an increasing demand for advanced chips. This results in a price boom for chips and thus affects the other industries relying on semiconductors.
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