Bitcoin Continues Downward Trend After November High
After nearly topping $70,000 in November, bitcoin has been on a steady decline — losing as much as 26% in the course of a month.
On Friday, the highest-priced cryptocurrency dropped by as low as $47,333.90 but, by NYSE close of day on Friday, was up just above 1% at $48,426.10.
It has floundered below the $50,000 level after a weekend flash crash on Saturday and, as Bloomberg reported, continues to see accelerating losses despite many predicting rapid growth in November.
“This is an important threshold and the failure to secure it will likely spook some traders,” Nigel Green, founder and chief executive of deVere Group, wrote in a note reported by Bloomberg.
These ups-and-downs show an asset class that moves in unpredictable ways, some analysts argue.
They say the rapid rise of many cryptocurrencies over the last few years ultimately leads to reversal and inflation, which hit another decades-long high in at 6.8% growth in November, does not result in an upward trend like many have predicted.
“It’s a speculative investment,” Chuck Cumello, president and chief executive officer of Essex Financial Services, told Bloomberg. “A more mainstream investment doesn’t drop 20% on a weekend.”
Cate Faddis, president and CIO at Grace Capital, said that the ebbs and flows seen over the last few months indicate that the excitement generated when cryptocurrency reaches should not be used to assume that it will only go up from here.
He said it is more likely that it will form a head-and-shoulders pattern that ultimately leads to reversal.
“The problem with crypto is, who’s going to catch that falling knife?” Faddis said in a Bloomberg TV interview. “I am very concerned about crypto. Honestly, it reminds me of ’08 with the real estate and it could spread to the entire market.”