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If Bitcoin continues to fall, it will become a red rag for the bulls of other risky assets. But there may be a causal element that also spurs capital weakness. Bitcoin is primarily an indicator of risk appetite in the markets.
It is now a $1.6 trillion market with a history of sharp and serious sell-offs. After an incredible jump, it's perfectly reasonable to think that it could lose 20-40 percent. Imagine if Microsoft fell 20% in a week. This will have a ripple effect on stocks because the people whose wealth is tied to cryptocurrency are the tech elite whose wealth is primarily tied to the stocks of the companies they own. It is also the retailers who have played a key role in the COVID rally. This is leverage in today's market. This is likely to lead to a concurrent sale of the most profitable stocks of the past decade.
Bitcoin is trading at $51,225.3 today, down about 10% over the day. It was the largest one-day percentage loss since January 21. The downward trend led to a decline in Bitcoin's market capitalization to $962.0 billion, or 59.86% of the total cryptocurrency market capitalization. At its highest level, Bitcoin's market capitalization was $1,142.3 billion.
Bitcoin has lost 11.79% in value over the past seven days. Its trading volume for the day before writing this article amounted to $76.0 billion, or 48.48% of the total volume of all cryptocurrencies. It has traded in a range of $50,867.5430 to $59,882.1133 in the past seven days. At its current price, Bitcoin is still down 17.66% from its all-time high of $61,795.84 set on March 13.
Since crypto markets are often volatile, this could very well be another normal pullback in the current bull cycle. A correction is needed to create strength for further upward momentum as markets cannot move up in a straight line. In addition, a record $6 billion in options is expected to expire on March 26, which often causes some volatility.
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