The cryptocurrency market went into a tailspin on Tuesday with Bitcoin slipping from $55,000 as low as $45,000. Some BTC exchanges recorded even a more significant decline. Thus, the corrective pullback was about 20%. Although this massive bearish impulse hadn't unfolded any further, traders got pretty nervous and agitated, which led to a record wave of long liquidations worth over $3.5 billion. Crypto exchange data aggregator Bybt reported 474,968 traders liquidated their long BTC positions on Tuesday.
Besides the fact that Bitcoin has been heavily overbought since the beginning of this year, this panic selling was triggered by specific fundamental factors. Speaking at a New York Times DealBook conference, US Treasury Secretary Janet Yellen criticized Bitcoin, mentioning the risks and dangers it poses for investors. Yellen stated:
“It is a highly speculative asset, and I think people should beware. It can be extremely volatile, and I do worry about potential losses that investors in it could suffer”
Investors spotted a real threat of tighter BTC regulation in these statements. As digital currencies rise in value and their popularity grows, they start attracting more attention from governments and regulators around the world.
It's worth noting that this is not the first attempt of the authorities to cast a shadow on the world’s most popular cryptocurrency. Bitcoin has been facing constant criticism from banks and central governments. However, its market capitalization, especially if we look at the long-term picture, keeps steadily increasing. Given that no other asset can boast the same ability to generate profit per unit of capital invested, self-sustained demand for bitcoin will keep being the main growth driver, contributing to the bullish sentiment and allowing investors to turn a blind eye to any criticism from the authorities. Market participants name one more reason for the recent BTC correction. We are talking about Elon Musk's comments, who warned that the price of Bitcoin and Ethereum seems high. These comments brought a fresh buzz that Musk himself took advantage of the situation to increase his position on Bitcoin and buy a little more with a 20% discount.
Since the market is still dominated by bullish sentiment and buyers keep opening new positions to buy any correction, we recommend holding your long positions in BTC/USD with targets around $75,000. If traders keep showing bullish enthusiasm, it will take BTC no more than a month to achieve this target.