Crypto Market Rattled: Bitcoin Dips Below $100,000

The crypto market has been on a rollercoaster ride lately, with Bitcoin, the world's largest cryptocurrency, dipping below the $100,000 mark. This sudden drop has left investors and enthusiasts alike wondering what's next for the volatile digital asset. Let's dive into the recent market developments and explore what's driving the price fluctuations.



Bitcoin's price has been on a wild ride since its inception, with dramatic highs and lows becoming the norm. The latest dip below $100,000 comes just a day after the cryptocurrency reached the milestone for the first time. The world's largest cryptocurrency continued to slide in early trading on Friday, before recovering some of the losses. The turmoil for Bitcoin did not appear to impact other major crypto coins, with Ether climbing nearly 5% in early trading on Friday, exceeding $4,000 for the first time since March.



The turn of fortune for Bitcoin interrupted a rally set off by the election of former President Donald Trump, who is viewed as friendly toward cryptocurrency. Since Election Day, the price of Bitcoin has climbed nearly 50%. That performance far outpaces the S&P 500, which has risen about 5% over the same period. However, Bitcoin has proven highly volatile since its launch about 15 years ago, with downturns cutting its value in half in recent years.

As recently as 2021, Bitcoin suffered a downturn that cut its value in half. The same thing happened a year earlier, when the initial outset of the pandemic triggered a panic among investors. "As long as the narrative stays positive, there's always room to grow," Bryan Armour, the director of passive strategies research at financial firm Morningstar, told ABC News before Bitcoin reached $100,000. "It's still a highly volatile asset," Armour added.

A surge had propelled Bitcoin past $100,000 late Wednesday, just hours after Trump nominated crypto booster Paul Atkins to chair the Securities and Exchange Commission. Atkins, the CEO of consulting firm Patomak Partners, serves as co-chair of the Token Alliance, a cryptocurrency advocacy organization.



The recent market developments have raised questions about the correlation between Bitcoin and the broader stock market. While Bitcoin was once hailed as an inflation hedge, its recent performance has shown that it behaves more like a risk asset, closely tracking the movements of tech stocks. As tech stocks tumbled this week, so did digital assets, with the total crypto market capitalization falling by $314 billion from Aug. 2.

One source of investor uncertainty over crypto was the collapse earlier this week of TerraUSD (UST), previously a stablecoin darling. The so-called algorithmic stablecoin cratered the broader crypto market when it fell well below its theoretically fixed peg to the U.S. dollar. The point of the stablecoin, and others like it, was to offer a safe haven for investors seeking to avoid the fluctuations in other cryptocurrencies like Bitcoin and Ether, by holding a constant value, no matter market conditions. In this case, UST lost that peg and traded as low as 13 cents on Friday after a week of turbulence. Meanwhile, Luna, its sister cryptocurrency, became nearly worthless overnight after trading for $80 a week earlier. As investors saw the stablecoin dropping, they rushed to withdraw their money, causing what some analysts have called a death spiral. Major crypto exchanges ultimately delisted both Luna and UST to protect consumers.



As the crypto market continues to grapple with volatility and uncertainty, investors are left wondering what the future holds for Bitcoin and other digital assets. While some analysts have described the crash as a major milestone or the end of days, others have advised investors to stay the course. A new report by Bank of America Research says it was the worst implosion since May 2021, and that it measures up to both the 2008 financial crisis and the dotcom crash in 2000.

In conclusion, the recent dip in Bitcoin's price below $100,000 has rattled the crypto market, with investors and enthusiasts alike wondering what's next for the volatile digital asset. While some analysts have raised concerns about the correlation between Bitcoin and the broader stock market, others have advised investors to stay the course. As the crypto market continues to evolve, it's essential to stay informed and make well-researched investment decisions.