Since the beginning of February 2021, Bitcoin has hit its lowest point, putting it as the worst weekly slide in almost a year amid broader losses in risk assets. It is known that Bitcoin, the largest cryptocurrency, sank as much as 21% this week. Based on The wider Bloomberg Galaxy Crypto Index, tracking Bitcoin, Ether, and three other cryptocurrencies is down 23% this week. According to consolidated pricing compiled by Bloomberg, The cryptocurrency prices earlier plummeted to as low as $45,525, nearing a critical Fibonacci level at around $45,000, before recovering some losses to about $46,375. Also, the fall of Bitcoin appears amid more voluminous chaos in global markets. At the same time, bond yields herald growing expectations that growth and inflation are moving higher and forcing traders to reevaluate their positions across multiple asset classes. On Sunday (2/21), Bitcoin continued to climb to a new all-time high above $58,000 but fell to just above $46,000 in early trading Tuesday (2/23) morning.
The massive drop in Bitcoin is somehow figuring like a follow-up of skeptical comments by some famous people, starting with SpaceX founder--Elon Musk, US Secretary of Treasury--Janet Yellen, and Bill Gates. Starting with Elon Musk, even though Tesla had invested a bulky $1.5 billion in Bitcoin to endure on its balance sheet, Musk is starting to show some concerns about Bitcoin's surge. "That said, BTC & ETH do seem high lol," he tweeted on Saturday (2/20), declaring that the prices of both Bitcoin and Ethereum, the world's second-largest cryptocurrency, look exceptionally high. Musk had to lose his wealth of US $ 15.2 billion or the equivalent of Rp 210 trillion by the time Bitcoin experienced a considerable dip, making the title of the wealthiest person in the world was no longer held by Musk. Following Elon Musk, Janet Yellen expressed her worries about Bitcoin's erratic fluctuations. She stated in an interview, "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." Besides her opposing viewpoint of Bitcoin, various government agencies have thought of designing alternative digital currencies hoping that it can be used as a versatile global payment system. The Fed has studied the matter and considered creating a new digital currency that it hopes will launch in the upcoming times. Lastly, Bill Gates said that it was one thing Tesla to invest in bitcoin, but that doesn't mean average investors should follow those actions. "My general thought would be that, if you have less money than Elon, you should probably watch out," he said in an interview with Bloomberg. Despite the current drop, Bitcoin prices are still up more than 65% so far in 2021.
Bitcoins have also become a heated topic in Indonesia. Governor of Bank Indonesia, Perry Warjiyo, stated that according to the constitution, Indonesia has only one currency: the Rupiah, which means that any currency, whether it's a coin, paper, or digital, should be based on the Rupiah and under the complete control of Bank Indonesia. This particular statement marks Bitcoin as an illegitimate payment instrument in Indonesia. Consequently, as the central bank, Bank Indonesia is preparing the so-called Central Bank Digital Currency (CBDC). CBDC is a digital currency that is based on IDR and was created by Bank Indonesia to encourage the digitalization of Indonesia's economy. These conditions would restrain the notoriety of Bitcoin and other cryptocurrencies. Unlike Bitcoin, which has a finite supply of 21 million, the CBDC's supply can be adjusted by Bank Indonesia to promote Indonesia's economic objectives. The CBDC will also be distributed both as wholesale or retail to our monetary system through banks and fintech. In essence, Bitcoin's popularity and rise in euphoria in chasing returns from low-interest alternative investments show that Bitcoin is entering a new phase of maturity. As investors now treat them with growing respect, we could clearly see that it successfully grabs the market's attention. But the current massive drop generates some questions: could we assume that Bitcoin is highly speculative, and is it worth investing in Cryptocurrencies?
Sources:
Bloomberg
CNN
The New York Times
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