Bitcoin experienced a volatile week, with significant price fluctuations mirroring trends in the U.S. stock market and influenced by global economic news. The cryptocurrency peaked at an all-time high of $104,669 on January 25th. Since then, its value has gone through wild swings, reflecting its extreme volatility and sensitivity to larger market forces. Recent price action was a stark reminder of Bitcoin’s volatility. It illustrates both the tremendous potential promise and equally great peril associated with investing in it.
Recent Price Movements
Bitcoin BTC price has been on a wild ride. The week opened with a continuation of last Friday’s slump, declining 6.93% to just over $74,000 by Monday. By the close of trading on Monday, Bitcoin had bounced back over the $78,000 mark. On Wednesday, the price made a stunning leap, jumping almost 14%. With this explosive growth came the storms as well, with Thursday bringing an 8.74% decline in the value of Bitcoin. In after-hours trading period on Thursday, Bitcoin had shed 3.43% to just over $79,700.
“Typically, when we see a strong market pullback in the traditional finance world, crypto usually mirrors that,” - Nick Selvaggio
In fact, Bitcoin’s price movements often track the direction of the U.S. stock market – especially the S&P 500 and Nasdaq – like a shadow. This positive correlation is evidence that investor sentiment, particularly towards riskier assets, drives Bitcoin’s price.
Correlation with the Stock Market
Unfortunately, this mirroring effect only serves to magnify the volatility, as Bitcoin has a penchant for doubling-down on the moves external markets are making.
“If we see the S&P dropping like crazy, bitcoin tends to drop like crazy, as well.” - Nick Selvaggio
The recent Bitcoin price drops were largely the result of Asian markets selling off. This shows how sensitive the cryptocurrency is to events in the global economy. This interconnectedness impacts Bitcoin—which serves as a reminder that, even though Bitcoin is borderless money, it is still highly susceptible to traditional economic forces. Bitcoin is the largest and best-known cryptocurrency on the market, BankRate added.
“Whatever the Nasdaq does, or the S&P does, it does a magnified version of that,” - Mitchell O. Goldberg
External Economic Factors
The price fluctuations serve as a reminder of the importance of staying informed about both domestic and international economic developments when investing in Bitcoin.
Bitcoin is borderless - Craig Rudes
The price fluctuations serve as a reminder of the importance of staying informed about both domestic and international economic developments when investing in Bitcoin.
