With bitcoin back under $30,000 this morning, there’s a notable symmetry to the digital currency this year.
It spent a little more than three months rising exponentially, and it has now spent a little less than three months falling exponentially. At the moment, it is back to where it started 2021, which was in the $29,000 range.
We bring this up not to remind you that markets go up and markets go down. We bring it up because it rather perfectly shows the degree to which bitcoin is a completely speculative and momentum-driven asset.
Bitcoin carried over a ton of momentum from 2020 into the first quarter of this year. At the crest of that wave was the public listing of Coinbase Global Inc. on April 14. The cryptoanarchists were at the proverbial gate, and it looked like one big buying opportunity. The same day, bitcoin hit a fresh record near $65,000.
In retrospect, though, that was the turning point. “This is going to be a roller coaster,” Wedbush Securities analyst Dan Ives told us that day. It was an understatement.
The momentum peaked that very day, and it’s been all downhill from there. Bitcoin is now down more than 50% from its record high, and everybody in cryptoland is trying to convince each other that this is the bottom.
But without fundamentals for investors to latch onto, it is impossible to determine what a fair value is for bitcoin. So its bottom will likely be marked by the same thing its top was: exhaustion. It was buying exhaustion on the way up, and it’ll be selling exhaustion on the way down.