After hitting a new all-time high of $69,000 on November 10, Bitcoin has been caught in a downtrend. Friday’s 9% swing to the downside sent jitters across the market, but strong support at the $53,800 level proved fortunate for bulls.
Since then, two further retests at $53,800 have also held firm. Crypto YouTuber Lark Davies observed that the latest bounce keeps alive a five-month uptrend line. Implying that, despite the uncertainty of the past few days, the macro-bull is still on track.
“WHOA!!! #bitcoin just bounced from an insane trend line retest!”
Since trending down from its all-time high, sentiment has also dived, moving into fear over the weekend. Currently, the Fear & Greed Index gives a reading of 33, slightly up from yesterday’s rating of 27. But still, characteristic of fickle market sentiment.
As IOHK CEO Charles Hoskinson mentioned at the start of the downturn a week ago, focusing on short-term price action and panicking is the wrong approach to take.
What Hoskinson calls for is a greater focus on the bigger picture, which, as he sees it, is the eventual adoption of crypto on a mass scale. While he couldn’t put a price on that, as it relates to ADA, if that were to happen, early investors (and hodlers) would be better off long-term.
How the recent Bitcoin downturn stacks up against others in 2021
While the recent sell-off may have sparked fear in certain sections of the crypto community, as far as sell-offs go, it was the least severe one in 2021.
Analysis by Glassnode looked at drawdowns from the all-time high to calculate a percentage for each sell-off in 2021. The recent November drawdown comes in at just -21.8%, the smallest drop by this criterion.
“#Bitcoin has traded down -21.8% off the ATH during this months [sic] correction. It may be a surprise that this correction is actually the least severe in 2021, measured in terms of drawdown from ATH.”
The other drawdowns in 2021 show January, February, April, and September ranging from -24.2% to -37.2%. With the May to July sell-off counting as the most severe, at -54%.
The May to July period was triggered by a series of adverse reports starting with Elon Musk’s U-turn on Bitcoin due to a belief Bitcoin mining is highly polluting. During this period, the other prominent piece was China ramping up anti-crypto moves, including a mining ban and further restrictions on retail crypto traders.
Although Bitcoin’s trendline remains intact, sentiment won’t change until the price moves back above $59,000. Nonetheless, today’s rally was a welcome relief for those worried about the end of the bull cycle.
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