After rallying a few hundred dollars to $100,000 on Friday, Bitcoin is seeing the biggest pullback since the election, as investors appear to engage in a series of profit-taking after the token’s recent rally.
Bitcoin is down 2% on Tuesday, falling as low as $91,400, as the original cryptocurrency continues its decline that began over the weekend. The broader crypto market is down more than 3% in the past 24 hours, according to the CoinDesk 20 Index, a measure of the performance of the top 20 cryptocurrencies.
Bitcoin-related stocks like Coinbase and MicroStrategy are also down.
Omid Malekan, professor at Columbia Business School, said Fortune that this behavior is normal for a volatile asset like Bitcoin, especially since the currency has increased by around $30,000 in such a short time.
“Bitcoin tends to be more volatile during bull markets than during bear markets. So it’s not unusual at all, as it goes higher, that it also experiences significant setbacks,” Malekan said. Fortune. “Actually, it’s the norm.”
Bitcoin’s historic run, which saw the currency hit a new all-time high of $99,500 on Friday, has led to increased liquidity in the market. MicroStrategy, a self-described “Bitcoin development company,” has capitalized on the price action, increasing the pace of its Bitcoin purchases in recent weeks. Bitcoin spot exchange-traded funds, a gauge of demand for the currency, recorded outflows on Monday for the first time in five days, losing more than $438 million.
While Malekan says it’s still “very possible” that Bitcoin will hit six figures before the end of the year, he noted that the $100,000 mark poses a “psychological barrier.”
“It is a well-documented phenomenon for markets in general that round numbers have, for obvious reasons, great psychological importance, and that is why people who perform more technical analyzes tend to view them as an obstacle possible, or what. they call for resistance, going up,” he said.
Despite this week’s stumbles, Bitcoin is still up 30% since the Nov. 5 election that returned former President Donald Trump to power. The crypto market has been on a monster ride amid optimism that Trump’s victory would result in a regulatory shift in favor of crypto.
Additionally, market optimism was bolstered by Securities and Exchange Commission Chairman Gary Gensler, seen by the industry as an unfairly aggressive regulator, announcing he would resign on Inauguration Day, contributing to triggering Bitcoin’s recent run towards $100,000.
