Tech

Why is $40,000 key for Bitcoin?

There are few investments more unpredictable than Bitcoin., except perhaps for other emerging cryptocurrencies, which can just as easily climb like wildfire, or end up disappearing. Thus, it is more than understandable that they continue to be viewed with considerable suspicion both by potential investors, as well as by regulators and the rest of the financial sector, who may one day take a step towards “normalizing” them, who the next day establish frameworks for potentially dire regulation.

Bitcoin, in addition, is fortunately or unfortunately the great reference in this market. Let us remember that it was the first cryptocurrency to become popular, which at the same time gives it a fairly exclusive status, and also causes it to always be in the spotlight. The cryptocurrency revolution would not exist if it were not for Bitcoin, and its disproportionate growth over the years has caused it to be especially sensitive to a multitude of events, which hardly have an impact on other “cryptos”.

We could already see this clearly last year, with the effects of the measures adopted by Tesla in relation to Bitcoin. Elon Musk made it clear to us, although we do not know if that was his intention, how easy it is to conspire to manipulate the price of Bitcoin. And there is something that we cannot forget: nothing, except the very faith in cryptocurrency, sustains its value today. We are talking about a purely speculative value, and therefore it is much more fragile than other investments that are based on something other than futures.

So, why is Bitcoin and $40,000 being talked about in recent days? Well, because, as we can read in Business Insider, it is a key support for Bitcoin and, if broken, its value could be devalued much more. In other words, analysts think that if the price of Bitcoin falls below $40,000 in a sustained manner (not in a timely manner, as it did yesterday, and recovering quickly), its value could depreciate up to about 33%. , approaching what is considered to be its secondary level, the $27,000.

So that, the big question for investors is whether the cryptocurrency will be able to stay above that value, because in this case there would be some margin for its price to experience good growth in the medium term. However, if what is currently its floor breaks, the aforementioned $40,000, and the drop predicted by some analysts occurs, this would not only compromise its present, but also its future in the short, medium and even long term. Something that, in turn, would feed a more negative view, which could lead to a quite dangerous vicious circle for Bitcoin and, it may rebound, for other cryptocurrencies as well.

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