Bitcoin continued its decline on Saturday after potentially positive catalysts from El Salvador and Square Inc. were unable to assuage investor concerns over Chinese regulatory risks.
The world’s largest digital coin slipped to trade around $35,220 as of 6:31 p.m. in New York, down 5.3% in the past 24 hours. The move extends its downtrend for a second day after a cryptic tweet from Elon Musk that hinted at a potential split with the cryptocurrency.
Weibo, a Chinese social-media service, appears to have blocked some crypto influencer accounts on Saturday, citing violation of unspecified laws and Weibo community rules. While Weibo has cracked down on various crytocurrency-related accounts in the past years, the news came on top of recent harsh Chinese regulatory rhetoric that have already led to a plunge in prices for many digital coins.
Meanwhile, El Salvador president Nayib Bukele said he plans to submit legislation that will make Bitcoin legal tender in the country, a first in the world, according to a video message he gave to the Bitcoin 2021 conference in Miami.
Square Inc. said Saturday it will invest $5 million to build a solar-powered Bitcoin mining facility at a Blockstream Mining site in the U.S. through a partnership with the blockchain technology provider.
Weekends in recent months have been rocky for crypto, which trade every day of the week. Before this weekend, Bitcoin’s average swing on Saturdays and Sundays this year comes in at 5.35%.
“Weekends have not been kind to Bitcoin lately,” said Nicholas Colas, co-founder of DataTrek Research. “You don’t have institutional players involved as much, it’s not as liquid a market as it is during the week.”
Musk has agitated Bitcoin and other digital coins with his social media posts. On Saturday, he tweeted that “Goods & Services are the real economy, any form of money is simply the accounting thereof.”
Bitcoin is struggling to break above its 20-day moving average — it failed to do so on Thursday and Friday — and is having a hard time advancing toward $40,000. If the coin were to breach that round-number level, it would probably test its 200-day moving average of around $41,500, something many chartists would consider a bullish catalyst.
However, as Bitcoin continues to fluctuate in a narrow range, a retest of the $30,000 level could also be in play until more positive catalysts emerge.
Earlier: Bitcoin’s Wild Weekends Turn Efficient Market Theory Inside Out
Still, many point out that the crypto space has always been volatile. Its price swings — up and down — are a characteristic of the market, they argue, and many of its long-term investors are undaunted by its fickle day-to-day swings.
“Our investor base has experienced market volatility many times and they know that this comes with the territory — the ability for there to be pretty pronounced movements in price are native to investing in crypto, particularly at this point in crypto’s life cycle,” said Michael Sonnenshein, CEO at Grayscale Investments. “Investors don’t really get phased.”
“It’s very difficult to make a fundamental case sometimes for some of these, and so I think that’s your primary risk,” JJ Kinahan, chief market strategist at TD Ameritrade, said by phone.
— With assistance by Kenneth Sexton, and Claire Ballentine