Bitcoin had a wild ride after hitting record highs and then pulling back. Yahoo Finance’s Dan Roberts takes a look at who might have been buying the dip.
Video Transcript
ADAM SHAPIRO: Let’s turn to Dan Roberts, because Bitcoin investors are on a bit of a roller coaster, up, down, up, down. There was the highs above 40,000. Then they fell, but back up again. Dan, money never sleeps, especially when it’s Bitcoin. It always trades, right?
DAN ROBERTS: Well, you’re right, Adam. There’s no market close for Bitcoin. And look, people who have been invested in this space for years are used to short-term volatility. I mean, that’s what you get with cryptocurrency.
Now, if you look at the last few weeks, as you mentioned, there was a serious correction and we sunk as low as 28,000 in the past 48 hours. But I think a lot of this was profit taking. I mean, only 10 days ago, Bitcoin was at 40,000. So you have some people who cashed out. Remember that the price doubled in about a month’s period. And now you have big institutional firms buying back in, buying the dip.
The other thing I’d point to, and I’m always careful, Adam, as you know, to give the caveat that it’s never just one news headline that moves this market. Now that said, there was some negativity, and you saw a little bit of a dip after what Janet Yellen said a few days ago in her confirmation hearing. She said she doesn’t like that cryptocurrency is used for illicit financing. She has since then clarified her views. In a letter to the Senate Finance Committee just yesterday, she clarified that she wants to bring new regulation and new frameworks to foster innovation with cryptocurrency and make sure that it is used for better things.
So she’s very much hung up on using Bitcoin and other coins for cybercrime, and there are many who are concerned about that. But you know, I think that maybe it was sort of an overreaction, that people said, oh, Janet Yellen is going to be unfriendly to Bitcoin. And by the way, as Treasury Secretary, she’s not going to be the one overseeing Bitcoin anyway.
SEANA SMITH: She won’t be. But Dan, I mean, I think one of the big issues or one of the big questions here surrounding Bitcoin, certainly for investors who are thinking about maybe investing in Bitcoin, has been the volatility, what they should expect now going forward, especially since it’s getting more and more interest from institutional investors. Do you think that’s going to have any impact on volatility here going forward for Bitcoin?
DAN ROBERTS: Well, it’s interesting. You know, Jared Blikre and I a few weeks ago here on the shows were discussing a research report that suggested that there are now so many long-term holders, institutional firms, invested that the amount of Bitcoin that’s actually in circulation for trading is likely to be even more volatile. You know, it’s a small supply, because those big firms have bought up big chunks and they’re holding on to it.
Now, that said, again, I mentioned short-term volatility. I really want to stress that. Bitcoiner’s who have been in it for a decade point to the full timeline, that whole chart since the beginning. And they say, look how much it’s gone up over time.
And that really is true. There’s long-term volatility, but my goodness. It has gone up by leaps and bounds over time, even if you just looked five years ago. Now, of course, everyone points to the two kind of massive peaks and then the corrections afterwards and he says, oh, it’s too volatile. 2017 and then the correction in February of 2018, and now the huge ride we’ve seen at the end of 2020 into 2021. I don’t expect the short-term volatility to change, no.
But I would say, Seana, regardless of whether you’re a big believer in the space, there’s something cynics used to say. They’d say, Bitcoin could go to zero. I don’t think that’s going to happen. No one really knows what’s going to happen to the price in the next few weeks or months, for sure, but it’s not going to go to zero.
ADAM SHAPIRO: Well, and just today, it’s gone up about 10%. Dan Roberts, thank you so much for another Bitcoin crypto update. We appreciate it.