Bitcoin slipped as much as 21% on Sunday and Monday in the biggest two-day drop since March. While the digital token recovered some of the losses during the European session, it was still down for the day.
“Whether this is the start of a larger correction remains to be seen, but now we’ve seen this dish break, so it just might be,” said Vijay Ayyar, business development manager with the Luno crypto exchange in Singapore.
Bitcoin has more than quadrupled in the past year, bringing up memories of the 2017 mania that made cryptocurrencies a household name before prices collapsed just as quickly. Prices nearly hit $ 42,000 on Jan. 8, with retail traders and Wall Street investors demanding a share of the stock.
Bitcoin slipped 6.2% to $ 35,555.59 at 10:37 a.m. in London.
“It’s time to take some money off the table,” Scott Minerd, chief investment officer at Guggenheim Investments, said in a tweet from his verified Twitter account. “Bitcoin’s parabolic rise is unsustainable in the short term.” At the end of December, Minerd predicted that Bitcoin could eventually reach $ 400,000.
Bitcoin’s parabolic rise is not sustainable in the short term. Vulnerable to a setback. The technical increase target of $ 35,000 was exceeded. It’s time to take some money off the table.
– Scott Minerd (@ScottMinerd) January 11, 2021
True believers in Bitcoin claim the rally this time is different from past boom-bust cycles as the asset has matured with the entry of institutional investors and is increasingly seen as a legitimate hedge against market weakness. dollar and inflation risk. Others fear the rally is independent of reason and fueled by vast swathes of fiscal and monetary stimulus, with Bitcoin never set to serve as a viable alternative to currency.
With so many investors keen to get rich on Bitcoin, the asset is attracting the attention of regulators. On Monday, the UK’s financial watchdog issued a stern warning to consumers looking to profit from crypto: be prepared to lose everything.
“Investing in crypto assets, or related investments and loans, generally involves taking very high risks with investor money,” the Financial Conduct Authority said in a statement. FCA’s concerns include price volatility, the complexity of the products offered, and the lack of consumer protection regulations around many products.
–With help from Mark Cranfield.