The second quarter of 2021 was the worst for Bitcoin since 2018. This segment began with the cost of the main cryptocurrency at the level of $ 58,800, but today BTC is traded in the area of $ 33,000 .
According to analytics platform Skew, the return on BTC in the last quarter was -41 percent, while in the first quarter the same indicator reached 102 percent .
We’ve checked the actual data: Bitcoin is trading at $ 32,891 this morning. On the hourly chart of the cryptocurrency, a recent local high of $ 36,600, recorded on June 29, is noticeable.
Since then, the main coin has been showing a gradual decline, which also negatively affects altcoins. The fall in BTC traditionally affects the rest of the cryptocurrencies – however, as well as its growth.
Bitcoin price hourly chart
Why the Bitcoin rate fell
The return on BTC for the previous second quarters for 2020 and 2019 was 42 percent and 157 percent, respectively. Since 2014, when the cryptocurrency profitability was 33.95 percent in the second quarter , it has averaged -6 percent for the aforementioned time period of the year, Decrypt reports.
In fact, the second quarter has traditionally been a positive period for BTC: since 2014, the cryptocurrency has shown positive returns in six out of eight cases. This means that, at least taking into account the previous results, traders and investors did not expect this from the cryptocurrency.
In addition, at that time, the largest public companies like Tesla and MicroStrategy did not have tens of thousands of bitcoins at their disposal – and this is also an important factor for the behavior of the cryptocurrency and its reputation in the eyes of ordinary users.
Bitcoin profitability table for different periods of time
Please note that Bitcoin growth rates in late 2020 and early 2021 are still far from the record set at the end of 2017. Then the cryptocurrency for the quarter grew by 210 percent. Since then, it has never surpassed the 200 percent level.
The record drop in Bitcoin over the past three months is due to several reasons, analysts say. One of them is a criticism of one of the richest people in the world, Elon Musk. He previously stated that his company Tesla is very concerned about the «negative impact» of mining BTC on the environment, so it is stopping accepting coins as a means of payment for its electric cars. Recall that it was the acceptance of BTC for Tesla that became one of the key reasons for the coin’s growth in the first quarter of 2021.
The same goes for Tesla’s own investment in BTC. The company invested $ 1.5 billion in cryptocurrency, as it said in a report to the US Securities and Exchange Commission. Since then, the automotive giant has retained 90 percent of its initial cryptocurrency investment.
10 percent of the investment was sold to test the liquidity of the coin market. In other words, Tesla wanted to test whether it was possible to get rid of such a volume of BTC without affecting the market or dropping it.
Musk’s Twitter message
Following Musk’s tweet, Bitcoin’s price quickly dropped from $ 56,000 to $ 43,000. A little later, China joined the flow of negative news – the local government began an active campaign against cryptocurrency miners who are forced to leave the country right now. The reason for the pressure is still the same concern about the impact of mining on the environment, since in China most of the electricity is produced in environmentally harmful coal-fired power plants.
The moment Musk tweets about Bitcoin
The consequences of the outflow of miners from China are already visible. In particular, this affected the drop in the hashrate of the Bitcoin network – that is, the total amount of computing power in it. And if at the peak on May 9 the indicator reached 191 exahesh per second, then on the local day on June 28 it amounted to 66 exahashes per second.
Bitcoin network hashrate chart for the last three months
By the way, the beginning of the second quarter was marked by the event expected by many crypto enthusiasts – the IPO of the cryptocurrency exchange Coinbase, that is, its transformation into a public company, whose shares began to be traded on stock exchanges. The news was greeted positively, but the IPO itself was viewed by some experts as a local maximum for the market. As you can see, this is what happened – the beginning of trading in stock exchange shares almost day after day coincided with the establishment of a maximum Bitcoin rate and its further collapse.
So far, the main cryptocurrency cannot gain a foothold even above 35 thousand dollars , which is a clear sign of the dominance of sellers in the market. Even the news of BTC being accepted as a legal means of payment in El Salvador has not generated a significant reaction in the cryptosphere in terms of price movements.
Most likely, until Bitcoin demonstrates rapid growth at least above 40 thousand dollars, it will be too early to talk about a new round of the bullish trend, which means that while investors are quite justifiably waiting.
We believe that Bitcoin’s current price movements are not surprising. Still, before that, the cryptocurrency soared from 10-11 to 64 thousand dollars within several months – and after that the market needs a break. As the chart shows, crashes of this magnitude were followed by consolidation [ie strengthening of a certain price level – editor’s note] and further growth. I would like to believe that this case will not be an exception.
