The digital asset sector is always ready to face drastic drops even after assets skyrocket to an outstanding peak. Bitcoin has been performing impressively within the past few days as it retook its all-time high, which was $58,000. Not long after that, the asset bypassed key resistance within that range and skyrocketed to the $60,000 point within a day.
This feat led to positive responses from the space, but the crypto showed that it wasn’t done with the uptrend. The asset moved past the $60,000 point to inches away from $62,000, where it corrected. The correction is around 8%, and it took the crypto price to around $55,000. Not many saw the price fall coming, but it’s common for the asset to fall before hitting a new high.
Bitcoin’s journey to $61,700
The new pullback is one of the most drastic declines that Bitcoin has seen in March, and holders hope that it would not take the asset to the bear market. The asset was around $55,000 early this morning, but it soon went around the $56,000 range within some hours.
People linked the asset’s growth by the stimulus package worth about $1.9 trillion, which the president, Joe Biden’s had signed off. While there is no proof that the package directly impacted the asset, it could have affected it in a way people don’t understand yet.
The dollar did not perform very well in 2020, mainly because the pandemic had affected a major part of the economy. Even top hedge funds like Golden Sachs and Citigroup got significantly affected by the economic downturn, but this might have contributed to Bitcoin’s growth.
While major parts of the economy had problems, the digital asset industries boomed, and even the DeFi sector saw increased demand from both retail and institutional buyers. During the pandemic’s beginning, the feds had to make some decisions to increase the economy’s flow, which led to inflation. The inflation caused the dollar to decline, and investors saw the currency as an unsuitable value store.
Institutional monies joining the growing sector
Gold also underperformed during these times, leading to many buyers purchasing cryptocurrencies to record more attractive gains. Bitcoin was the suitable alternative, as it acted as a hedge against inflation’s harsh effect. While the asset had mainly retail buyers, it welcomed big institutional investors into the sector last year.
Apart from MicroStrategy’s iconic Bitcoin purchase in August, where it bought over $1 billion worth of Bitcoin, other institutional firms like Tesla took the lead in early 2021 by buying assets worth around $1.5 billion.
People believe that MicroStrategy’s Michael Saylor is a major influence behind Tesla’s move to purchase Bitcoin as the entrepreneur had told Elon Musk the importance of Bitcoin in building wealth. After the purchase, Bitcoin surged, which assured Tesla returns just hours after the purchase.
While American firms have made the biggest investments, other businesses globally have also purchased Bitcoin. A Chinese app firm called Meitu recently purchased $40 million worth of Ethereum and Bitcoin for a long-term hold.