Bitcoin rallied to an all-time high towards $65,000 on April 14, ahead of the Coinbase IPO, but plunged almost 20% when it came under US Treasury scrutiny.
The direct listing by Coinbase on the Nasdaq exchange on the same day, April 14, has led to the surge in Bitcoin prices. It is the first time that a major cryptocurrency exchange has gone public. Experts say that Coinbase will attract more institution funding.
The huge surge in prices in major cryptocurrencies was followed by a sharp fall.
Bitcoin under US Treasury Scrutiny
Bitcoin hit a peak of $64,800 on April 14 and immediately dropped 20% to a low of $52,500 over the weekend. BTC/USD has slightly recovered towards $54,700 levels on April 22. Â The big rally and the sharp decline have worried investors. It is now in a consolidation phase.
It is unclear why Bitcoin saw a sharp rally and followed it with a swift fall in value. Some consider that the US Treasury has brought Bitcoin under close scrutiny for money laundering.
Gary Gensler is the new chairman of the US Securities and Exchange Commission and is expected to develop a regulatory approach in the crypto market. Under the Biden administration and the guidance of Treasury Secretary Janet Yellen, crypto regulatory efforts are being taken, say sources. Money laundering is an offense that is easily possible through cryptocurrency transactions. Cryptocurrency users remain anonymous and cannot be traced easily, attracting money laundering and black money transactions.
Most crypto assets saw a drop to multi-week lows after the big rally in prices. The crypto market is on a consolidation stage, as high volatility keeps the value swinging over a wide range. Bitcoin will now move within a range of $50,000 to $65,000 for a few weeks, say experts. Bitcoin fell almost 20% over the weekend and is expected to consolidate before moving higher.
Bitcoin Rallies with Coinbase Global In Trading on Nasdaq Exchange
Bitcoin surged to almost $65,000 when Coinbase started its trade as a public traded company. The roller-coaster ride that investors saw from Bitcoin trading made many of them rich but keep them wary of its volatile movement.
Cryptocurrencies have been attracting new investors, as companies like Square, Visa and PayPal have enabled transactions in Bitcoin. Cryptos are considered a convenient method of payment and attract more users. Â Institutional interest is growing, with major companies like JPMorgan and Tesla showing interest in cryptocurrencies. In the crypto world, wealthy clients are able to manipulate crypto values through tweets and comments.
Bitcoin, which is also called crypto gold, is on an upward trajectory. Though gold has increased in value, Bitcoin value has multiplied far higher than the rally in gold. Bitcoin is now considered more of a risk asset. It attracts people who have invested in gold into the cryptocurrency as an alternative asset class.
Bitcoin was trading at $28,700 in January 2021 and is priced at more than double its value in April, within a span of just four months.
Cryptocurrencies Under Pressure
Experts say that the crypto market is coming under the scrutiny of the US Treasury that has brought it under pressure. Cryptocurrencies are under pressure in many other countries too.
European Central Bank President Christine Lagarde has said that bitcoin facilitates criminal activity. Her comments had also triggered a mild fall in crypto prices in January.
The US Treasury is considering a probe into money laundering on major cryptocurrencies, according to sources. In February, Treasury Secretary Janet Yellen had commented that Bitcoin was â€śinefficientâ€ť.
India is also considering a crypto ban, which is keeping investors wary. Turkey has also said that it would ban crypto payment from May.
Meanwhile, Dogecoin traded at $0.4060 on Monday. It touched a high of $0.45 on April 16. It spiked up by 550% after Elon Muskâ€™s tweet on Dogecoin. Such huge volatility caused by a single tweet is of concern to officials and they have the crypto market under a scanner to detect frauds and malpractices. There are various risks attached to cryptocurrencies that have kept the central banks of many countries monitoring it very closely as its investor base is extending.
Interest in Cryptocurrencies Increases
Major Cryptocurrencies surged higher last week when Coinbase crypto exchange became a publicly-traded company. Tesla has announced that it would accept crypto payments for its new Tesla car.Â PayPal purchases can also be made through cryptocurrencies.
The fiscal stimulus in most countries has helped bitcoin to surge during this pandemic period. Cryptocurrencies have almost doubled in value in 2021.
Ethereum surged to $2,420 on April 14, the same day that Bitcoin was at a lifetime high. It dropped lower over the weekend to $2,140 on April 18 and has now rallied again towards $2,425.
Rippleâ€™s XRP surged to 1.9633 on April 14 but moved lower to 1.1620 over the weekend.