After coming within a few hundred dollars of $100,000 on Friday, Bitcoin is experiencing the most significant pullback since the election, as investors appear to be engaging in a round of profit-taking after the token’s recent surge.
Bitcoin is down 2% on Tuesday, falling as low as $91,400, as the original cryptocurrency continued a slide that began over the weekend. The broader crypto market is down more than 3% in the last 24 hours, according to the Coindesk 20 Index, a measurement of the performance of the top 20 cryptocurrencies.
Bitcoin-related stocks like Coinbase and Microstrategy are down as well.
Columbia Business School professor Omid Malekan told Fortune that this behavior is par for the course for a volatile asset like Bitcoin, especially given the currency has grown around $30,000 in such a short amount of time.
“Bitcoin tends to be more volatile during bull markets than in bear markets. So, it’s not at all unusual, as it climbs higher, for it to also have significant pullbacks,” Malekan told Fortune. “In fact, that’s the norm.”
Bitcoin’s historic run, which saw the currency reach a new all-time high of $99,500 on Friday, has led to increased liquidity in the market. Microstrategy, a self-proclaimed “Bitcoin development company” has capitalized on the price action, increasing the pace of their Bitcoin purchases in recent weeks. Spot Bitcoin exchange traded funds, an indicator of demand for the currency, registered outflows on Monday for the first time in five days, bleeding over $438 million.
While Malekan says it is still “very possible” for Bitcoin to reach six figures before the end of the year, he noted that the $100,000 mark is a “psychological barrier.”
“It’s a well-documented phenomenon for markets in general that round numbers have, for obvious reasons, a lot of psychological importance and that’s why the people who do more technical types of analysis tend to think of them as possibly a barrier, or what they call resistance, on the way up,” he said.
Despite this week’s stumble, Bitcoin is still up 30% since the Nov. 5th election which swept former President Donald Trump back into office. The crypto market has enjoyed a monster run amid optimism that Trump’s win will translate to a regulatory shift in favor of crypto.
Additionally, the market’s optimism was boosted by Securities and Exchange Commission chair Gary Gensler, who was seen by the industry as an unfairly aggressive regulator, announcing that he will step down on Inauguration Day, helping to trigger Bitcoin’s recent run toward $100,000.
