Bitcoin has been on a rollercoaster ride over the last month. After starting November with an all-time high (ATH) of above $69,000, it is now trading at under $50,000. But what triggered this sharp drop?
Here’s a quick look at the timeline of key events that led to the rise and fall of Bitcoin:
Nov 1: Bitcoin ended October with a 40 percent gain and set a record high of over $67,000. The uptrend was spurred by seasonal optimism and excitement over the launch of the first-ever bitcoin futures EFT. Retracing from recent highs, Bitcoin was still holding strong around the levels of $61,000.
Nov 9: Bitcoin bulldozed past the $68,000 mark taking the crypto market to new peaks. This surge drove the overall market cap of the cryptocurrency market to about $3 trillion, a 280 percent jump from January figures.
Nov 11: Bitcoin flirted with the $69k mark for the first time after US inflation rate hit a 31-year peak. CPI rose 6.2 percent in the 12 months through October, which is the highest rate of annual inflation since 1990. People scrambled to Bitcoin as a hedge against rising costs.
Nov 16: Bitcoin lost some sheen on profit booking after Twitter CFO Ned Segal said investing in crypto ‘doesn’t make sense’ right now. Segal said he was unable to figure why one would give up a stable investment for a volatile market. The crypto lost 6 percent in morning trade.
Nov 19: After the relentless rally, the crypto market took a breather. Bitcoin tumbled to around $57,000. While analysts remained bullish for long-term, they signalled more volatility.
Nov 23: El Salvador announced plans for a tax-free ‘Bitcoin City’ backed by $1 billion worth Bitcoin bonds. The International Monetary Fund, however, was unhappy about El Salvador’s adoption of Bitcoin as a legal tender due to apprehension over its volatility. IMF said this can derail the economic stability of the entire country.
Nov 25: India announced it will introduce a bill in the winter session of Parliament to ban private cryptocurrencies and that the Reserve Bank of India will launch an official digital currency. While no further details were provided, the announcement caused panic, reminding market participants of the recent crackdown on cryptocurrencies in China, where all digital currency transactions are deemed illegal.
India is believed to have up to 20 million crypto investors translating into holdings worth $5.39 billion. Bitcoin slumped in India and the broader sentiment led to a further drop of the legacy coin below $56,000.
Nov 26: Bitcoin continued to slip following the discovery of a new highly mutated COVID-19 variant christened ‘Omicron’. Investors began fleeing the digital currency to safer conventional assets. Bitcoin nosedived below $53,000, its lowest in six weeks.
Nov 30: Jerome Powell, chairman of the Federal Reserve, declared that the Fed would accelerate the tapering of treasury bond purchases. The tapering will be to the tune of $15 billion per month. This is estimated to double to $30 billion a month in the future. The news sent Bitcoin prices into a tizzy.
The legacy coin continued to be under pressure through this week with moments of respite. “Our expectation is the rest of Q4 will be a hard month, we aren’t seeing the strength in bitcoin that we generally see after one of these crushing days,” Matt Dibb at Stackfunds, a Singapore-based crypto fund distributor told Mint.
At the time of writing, BTC was trading around $49,842, down around 1.5 percent. It has lost nearly 12.25 percent in the last week.