Why Bitcoin Was Sliding Tuesday Afternoon
Key Points
No rally lasts forever, and the profit-takers did their thing.
The looming one-week duration of the government shutdown also provided a reason for crypto investors to worry.
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The latest crypto rally that saw Bitcoin (CRYPTO: BTC) cruise to yet another all-time high (in excess of $126,000) reversed course on Tuesday. Over the 24 hours leading up to late afternoon that day, the bellwether cryptocurrency lost over 2% of its value.
After the rally, a pause by investors
Profit taking from investors wanting to book gains from the rally played a part in the Bitcoin slump. Additionally, the approaching one-week "anniversary" tomorrow of the federal government's shutdown reminded some of the vulnerability of risky assets like digital coins and tokens.
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All things being equal, macroeconomic and/or political volatility tends to drive investors into assets considered safer.
Bitcoin wasn't alone in its Tuesday price slide; in what feels like a post-rally correction rather than a potential rout, plenty of altcoins were also trading in the red deep in the afternoon.
A reason to be cheerful
Meanwhile, there were a few indications that Bitcoin specifically, and cryptos generally, still face a bright future. A report from Deutsche Bank published that day opined that both Bitcoin and gold will probably be held by many of the world's central banks by 2030. This stands to reason, as the leading cryptocurrency is increasingly being considered a reliable store of value.
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Eric Volkman has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.
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