Bitcoin has had a rough 24 hours. At the time of the writing, the world’s leading cryptocurrency has crashed over 5% in the last day to a price of just over $29,600 per coin, according to data from CoinDesk. Those are lows bitcoin hasn’t seen for almost a month. So what’s happening?
Bitcoin, generally, is a very volatile asset. After hitting an all-time high of over $63,000 in April, the coin has gotten pummeled since May. Right now it’s worth less than half its all-time high value. As for why bitcoin has dropped 5% in just 24 hours, a lot of it has to do with the delta variant of COVID-19. Specifically, what delta portends for the world’s economic recovery.
Delta is spreading like wildfire in most countries—including ones with a high vaccination rate. Its high transmissibility, ability to infect the fully vaccinated, and its penchant to wreak havoc among the unvaccinated hit Wall Street hard yesterday as investors began to lose confidence in any global economic recovery. The Dow yesterday had its worst day in eight months, with other markets falling badly, too.
It’s no surprise then, that investors started dumping bitcoin as well, hoping to make off with any gains they’ve made if they’ve held the crypto for a long time. Taking a profit from a massive bitcoin gain is one way to dampen investment losses in traditional stocks.
What remains to be seen is if the selloff of bitcoin will continue. The cryptocurrency is certainly more susceptible to panic selling than traditional stocks, due to its volatile nature. The only thing anyone can really say for certain is no one can know which way bitcoin is going to swing next.