Two Biggest Social Networks Spurred Rally and Crash of Bitcoin (BTC), But It Will Continue Rising

Two Biggest Social Networks Spurred Rally and Crash of Bitcoin (BTC), But It Will Continue Rising

Source: Shutterstock

The volatility of the leading cryptocurrency is fueled by statements from the management of the largest social networks.

Bitcoin failed to gain a foothold above the psychologically significant $50K level. The rollback was triggered by a statement from a Facebook top manager that BTC will not be used for on-net payments. David Marcus, head of development of the wallet for the Diem cryptocurrency called Novi, told Bloomberg that the issue of using bitcoin for payments is not even being considered.

The reason is the high volatility of the first cryptocurrency. Thus, Markus also noted the technical imperfection of bitcoin, transactions in its blockchain take too long. Markus said that it is unacceptable when the value of an asset changes by 10%-20% per day. However, he emphasize–≤ too that BTC is a good investment asset.

David Marcus’ statement is in line with the broader discussion about the use of cryptocurrencies for payments on social networks. A month ago, Twitter CEO Jack Dorsey announced that bitcoin would be integrated into Twitter services. This sparked optimism in the markets, with BTC rising 70%, from $29.8K to a local high of $50.3K. The current 7% drop is the market’s response to information from Facebook.

Earlier it was reported that the largest social network is ready to abandon the development of its own cryptocurrency Diem and is negotiating with Circle, the issuer of the stablecoin USD Coin about using USDC for payments. However, David Marcus did not confirm in a new interview that Facebook will stop Diem’s development.

On the other hand, the reason for Jack Dorsey to say in favor of BTC may be that his second company, Square, is a large institutional investor and has 8,000 BTC (about $400 million) on its balance sheet. Square is not the largest institutional investor. According to the BitcoinTreasuries service, now about 3% of the total emission of the first cryptocurrency is owned by institutionals, about 537 thousand BTC. The largest bitcoin hodler is the IT company MicroStrategy. It holds 109 thousand BTC on the balance sheet. Tesla owns 43.2 thousand BTC.

Experts point out that it was the interest of institutional investors that backed the bullish rally this year. And while this interest is only growing, the rally can be continued until the all-time high of $64.8K is renewed. The closest resistance level that can be calculated using technical analysis is the price of $51.5K. The next resistance level is $58.8K.

The possibility of a crash below $45K is low, but it also exists. According to experts, if BTC falls to $42-44K, it will still be a correction, not a trend reversal.