The Bitcoin price crashed below $60,000 on Tuesday as worries of inflation coincided with the recent Taproot upgrade. BTC is trading at $59,466, which is the lowest it has been since October 28th. It has fallen by more than 15% from its highest level this year. Still, there are several reasons why this decline could prove to be short-lived.
Buy the rumour, sell the news
Buy the rumour and sell the news is a common phenomenon in the financial market. It simply means that investors tend to buy an asset before a major event or occurrence and then sell when it happens.
There are many examples of this. For example, the Bitcoin price surged a few months ago ahead of the highly anticipated Coinbase direct listing. This event pushed Bitcoin to an all-time high of about $65,000. The coin then crashed by more than 55% as investors sold that news.
In the past few weeks, Bitcoin has surged to an all-time high of almost $70,000 as investors waited for the Taproot upgrade. The upgrade led to improved privacy and open the door for smart contracts. Therefore, the price is now crashing as investors sell the Taproot upgrade. There have been more situations like this in the past.
Another reason why you should not worry about the current Bitcoin price pullback is where it happened at. It happened when BTC moved close to the $70,000 level. As shown below, the currency always suffers a major pullback when it approaches such a level.
