The sharp decline of Bitcoin has heightened concerns that the cryptocurrency bubble may be about to burst.
Bitcoin dropped as much as 26% on Sunday and Monday, the biggest two-day drop since March. After falling as much as 20% during the New York trading session on Monday, prices continued to fluctuate sharply. Since Friday, the market value of Bitcoin has evaporated by approximately US$185 billion (approximately Rs 13,560.05 billion), exceeding the market value of 90% of independent companies in the Standard & Poor’s 500 Index.
Vijay Ayyar, head of business development at Luno, a Singapore-based cryptocurrency exchange, said: “It remains to be determined whether this is the beginning of a larger correction, but we have now seen a parabolic breakthrough, so it may just be the case.”
Bitcoin has more than quadrupled in the past year, evoking the memory of the 2017 craze that first made cryptocurrencies a household name, and then the rate of price plummeting. On January 8, the price almost reached 42,000 US dollars (3.08 million baht), and retail investors and Wall Street investors shouted.
Matt Maley, chief market strategist at Miller Tabak + Co, said: “This is a parabolic trend. What happens to all parabolic trends? You will see serious corrections.”
He said that although Mali believes that Bitcoin will rise in the long term, it will still undergo serious corrections in the process.
He said: “It will still have a significant drop of 30-60%.” “And it will happen more than once.”
As of 1:36 pm New York time, Bitcoin had fallen 13% to approximately $33,159 (approximately 24.3 billion rupees). Other coins, including Bitcoin Cash, Ethereum and Litecoin, have fallen even more.
Scott Minerd, chief investment officer of Guggenheim Investments, said in a tweet on his verified Twitter account: “It’s time to spend some money.” Bitcoin’s parabola rises It is not sustainable in the short term. “In late December, Minerd predicted that Bitcoin may eventually reach $4,00,000 (approximately 2.9 crore rupees).
Bitcoin’s parabolic rise is not sustainable in the short term. Prone to frustration. Exceeded the target technical level by USD 35,000. It’s time to take some money off the table.
-Scott Minerd (@ScottMinerd) January 11, 2021
True believers of Bitcoin believe that this rally is different from past boom-bust cycles, because with the entry of institutional investors, the asset has matured and is increasingly seen as a legitimate hedge against dollar weakness and inflation risks . Others worry that due to a large number of fiscal and monetary stimulus measures, the rally is bound by rationality, and Bitcoin is unlikely to become a viable currency substitute.
With so many investors hoping to get rich from Bitcoin, the asset has attracted the attention of regulators. On Monday, the British financial regulator issued a stern warning to consumers hoping to profit from cryptocurrencies: prepare to lose everything.
The Financial Conduct Authority said in a statement: “Investing in crypto assets or related investments and loans usually involves taking high risks with investors’ money.” FCA’s concerns include price fluctuations and the complexity of the products offered. Sex and lack of consumer protection regulations surrounding many products.
-With the assistance of Mark Cranfield.
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