To give some context, in just over a year, Bitcoin has rallied over 1600%; from March 2020 lows, to the current all-time-high, $64,899. Along the way, we have seen pullbacks of between 10 and 30%, which in a bull market is typical and classed as healthy corrective moves. We saw the same thing in the rally of 2017 before making a then all-time high of just shy of $20,000.
Now on to the current decline. In the last week, we have seen Bitcoin fall from its current all-time-high to as low as $47,500; at the time of writing, we have recovered from the lows and we are currently trading at $48,100. In percentage terms, we are down just over 25%.
Typically, when we see a decline, news headlines tend to get dramatic, but let us focus on the bigger picture and take things one step at a time. From a technical perspective we have reached an important support level with a range between $48,300 to $43,200. What we do from here will be important with regards to what we see longer-term. Breaking below would give more weight to the argument for an extended move lower longer-term. However, equally, we can use this support level to see Bitcoin extend its current longer-term bull run.
With regards to the reason behind the current move down, it has been reported that it is a result of President Joe Biden being said to propose doubling the capital-gains tax for the wealthy. One chief market strategist said: ““One of the biggest things you have to worry about is that the things with the biggest gains are going to be most susceptible to selling… It doesn’t mean people will dump wholesale, dump 100% of their positions, but you have some people who have huge money in this and, therefore, a big jump in the capital gains tax, they’ll be leaving a lot of money on the table.”
