The Bitcoin price drops a major step downward in the hours leading up to Tuesday’s daily candle close.
Bitcoin’s range was as volatile as participants in this market have seen in quite some time with a 24 hour low of $47,602 and 24 hour high of $57,958.
Bitcoin closed the daily candle at $49,265 and had immediate sell pressure on the new day before finding a local floor of $47,602.
Shortly after Asia awoke the market rebounded and participants pushed the price back over $50,000 early on Wednesday’s daily candle.
Why did Bitcoin price and market drop?
Determining why the price goes up or down is highly speculative but a few variables may be key to understanding this recent downward price action.
Bitcoin has been in a down trend or trading sideways since its ATH [$64,804.72] was made 29 days ago. In the crypto world 29 days is like 29 years but Bitcoin didn’t really take a breather after breaking its former ATH of just over $20k on December 16th, 2020. From that former high broken on December 16, 2020 to the new ATH made April 14, 2021 [119 days] the price marked up 222.2%.
Therefore, BTC’s price has averaged an increase of 1.86% per day for the last 119 days even after this recent pullback.
Renewable Energy is an Old Narrative
It can’t be ignored that Elon Musk has a little bit of sway on social media and in the legacy media as well. With the recent sell off of Dogecoin, Elon took to twitter on Tuesday and publicly admonished Bitcoin miners for using too much energy in a note.
Tesla & Bitcoin pic.twitter.com/YSswJmVZhP
— Elon Musk (@elonmusk) May 12, 2021
Michael Saylor, was pretty quick to chime in with a tweet response to Musk’s claims and also remind him or enlighten him to how Bitcoin transactions actually work.
Ironic because no incremental energy is used in a #bitcoin transaction. The energy is used to secure the crypto-asset network, and the net impact on fossil fuel consumption over time will be negative, all things considered.
— Michael Saylor (@michael_saylor) May 12, 2021
It has long been a narrative that the Bitcoin ecosystem isn’t energy efficient. However, many studies have suggested the contrary.
A 2019 Cambridge study showed that of the 280 companies polled, 39% reported that they were powered at least in part by renewable energy sources.
Where does BTC go now?
Thus far Bitcoin has respected $47k as strong support. If $47k breaks down, the next stop historically on the chart is $43k.
If BTC holds $50k long enough there could be some bullish divergence that emerges. The long term macro trend is still very much intact above $43k and Bitcoin bulls are still very much in possession of the ball.