In the world of cryptocurrencies, everything can go very quickly in one direction or the other. While the sector had been enjoying a significant increase for several weeks, the trend reversed quite suddenly yesterday during the day. As reported by our colleagues at Cointribune, a major wave of liquidations amounting to 200 million dollars took place in the space of a few hours.
To cite only the example of Bitcoin, its value was at more than 34 000 euros this Tuesday, November 14 at 9 a.m. One day later, and at the time of writing, its level is around 32,700 euros, a very significant drop in just one day.
A lesson in humility for investors
At the moment, it is quite difficult to say what exactly is happening, but these oscillations illustrate the fragility of the market. As our colleagues rightly explain, this variation should be compared with the surge in Bitcoin following the publication of inflation figures in the United States in October.
Satisfied with good news, investors seized this euphoria to bet on cryptocurrency. Which shows that there is a real link between the world of cryptos and the global economy, at least in the minds of investors.
The sudden drop in price in the space of just a few hours also highlights the extent to which people who bet on cryptocurrencies must be vigilant. Everything can go very quickly in one direction or the other, and you have to be able to react very quickly.
At the end of October, we published an article where we questioned the reasons for the rapid and sustained rise in Bitcoin. Remember that an appeals court recently ruled in favor of the company Grayscale against the SEC, the policeman of the American Stock Exchange.
Concretely, the latter is trying to transform its Grayscale Bicoin Trust fund into an index fund listed indexed to spot bitcoin (spot bitcoin ETF). Many observers are convinced that this will allow other bitcoin ETFs from companies such as BlackRock and Wisdom Tree to be authorized.
In short, bitcoin would become a mainstream savings product that would be integrated into savings plans. This would greatly simplify investments, and huge capital flows could bet on this cryptocurrency.
Among the other explanations that we gave then, there is also the fact that cryptocurrencies are sometimes perceived as values refuges in the context of various international crises. Their recent volatility, however, is there to remind us of the rules of prudence that investors must follow.