
The value of bitcoin dropped below $26,000 this week, despite decreased activity in the market, a growing crisis in China's property sector, and a report that SpaceX has sold at least some of its bitcoin holdings.
Blockchain analyst firm Glassnode and crypto firm Coinshares report that a general lack of interest in the crypto market is causing this week's bitcoin price drop. While bitcoin opened the week trading around the $29,400 mark, it fell to around $2,697 by mid-Friday.
The report from CoinShares, released on Friday, revealed the connection between lower trading volumes on trusted exchanges and increased price volatility for bitcoin.
What do you think Elon Musk will do with Bitcoin's drop?
There could have been another trigger, the perception that Elon Musk's space exploration company would get rid of bitcoin, he said. The Wall Street Journal published on Thursday that SpaceX had marked down its cryptocurrency holdings at $373 million and sold it to investors.
The Tesla CEO's tweets have affected the price of certain cryptocurrencies, particularly meme coins like Dogecoins.
Coinshares also cautioned investors to keep an eye on Musk's actions as they tend to impact the bitcoin market.
In terms of specific events that may have led to increased downward pressure on the bitcoin price, some market commentators have pointed to China's Evergrande Group filing for bankruptcy.
While bitcoin is known as 'digital gold' and an aspirational hedge against economic turmoil, the value of the crypto asset often falls alongside other risk-on assets at times of uncertainty, as was the case at the beginning of the COVID-19 pandemic.
Coinshares said it sees a potential economic crisis as a potential boon for bitcoin. Cryptocurrency trading in the U.S. was a bright spot for the crypto market this week, with Coinbase's regulatory approval for offering crypto futures trading in the U.S.
Coinshares also said that the market may be coming to terms with the fact that an approval of a spot bitcoin ETF, most notably from BlackRock, may not be arriving as quickly as the market originally anticipated.