Bitcoin Roars Back Following Last Week’s Massive Sell-Off

By April 28, 2021Bitcoin Business
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Bitcoin Roars Back Following Last Week’s Massive Sell-Off
Image source: © Grafner | Megapixl.com

Summary

  • Bitcoin rebounded significantly to AU$69,116 a coin on Monday morning after dropping to a low of AU$47,549 last week.
  • Tesla is set to release its first set of results after adding US$1.5 billion worth of Bitcoin to its portfolio in March 2021.
  • Some argue Bitcoin has no real value, failing as an alternative piece of payment infrastructure.

Bitcoin (BTC) has experienced a resurgence in the past 24 hours following a significant sell-off last week.

Bitcoin price moves up (Copyright © 2021 Kalkine Media Pty Ltd)

Last week, the world’s most valuable cryptocurrency saw a significant drop from well above AU$60,000 to a low of AU$47,549 on April 23.

The week ended April 23 saw a dip in the markets, including the crypto market, amid reports US President Joe Biden was planning to double the rate of capital gains tax for the wealthiest Americans to 43.4%

It was the first time, since the beginning of March, that the crypto had sunk below AU$50,000, with the entire crypto market shedding over AU$250 billion in a single day.

The drop led to panic as investors were left unsure as to how low the coin would go.

US President Joe Biden (Source: © Palinchak| Megapixl.com)

The recent sell-off of Bitcoin led to the crypto being highly undervalued, with the coin having a Relative Strength Index (RSI) of 31.93. Although the RSI must drop below 30 to be considered undersold, a score of 31.93 is close enough to indicate that the coin is undervalued.

The Elon Musk Touch

Tesla CEO and Bitcoin holder Elon Musk tweeted on Saturday, “What does the future hodl?” – a deliberate spelling mistake of ‘hold’, which refers to a crypto meme which originated in 2013. This could have been a contributing factor to Bitcoin’s most recent rise as any mention of the crypto by Musk correlates with a significant variation of price for the hyper-sensitive coin.

Musk has also bolstered the value of cryptocurrency, Dogecoin, in recent weeks following tweets supporting the alternate cryptocurrency.

Dogecoin, which began as a joke in 2013, rose 200% last week when Musk tweeted a picture of a ‘Doge’ barking at the moon – a variation of Spanish artist Joan Miro's painting " Dog barking at the Moon ".

Bitcoin investors will be paying close attention as Tesla (NASDAQ:TSLA) is set to release its first set of results after adding US$1.5 billion worth of Bitcoin to its portfolio in March 2021.

Does Bitcoin Have Real World Value?

Despite Bitcoin’s current market value, some pundits argue that the crypto has no real-world value siting its failure as an alternative piece of payment infrastructure.

According to some estimates, Bitcoin can only manage five to seven transactions per second compared to Visa, which can manage up to 65,000 transactions per second, making Bitcoin vulnerable to backlogs should there be a sudden spike in transactions.

Dutch Economist Alex de Vries claims the only ‘use’ Bitcoin has is hoping the value goes up and someone pays more than it was bought for.

Moreover, there have been claims that Bitcoin is a poor method of payment for items such as groceries as it can take up to one hour to receive confirmation of purchase. Such is the volatility of Bitcoin’s price that, within that hour, the price of Bitcoin could potentially drop significantly, which would leave the retailer out of pocket.

Moreover, Bitcoin’s transactions fees have soared in recent weeks, with the average cost of facilitating a transaction rising to AU$74 – just shy of its peak of AU$80 back in 2017.

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