The white-knuckle bitcoin ride yesterday took another twist as the worst two-day tumble in the digital currency since March last year stoked concern that the polarizing cryptocurrency boom might run out of steam.
Bitcoin slid as much as 21 percent over Sunday and yesterday to as low as US$32,389. That is the biggest two-day slide since global markets were first roiled by the COVID-19 pandemic last year and follows a record high of almost US$42,000 on Friday.
“It’s to be determined whether this is the start of a larger correction, but we have now seen this parabola break so it might just be,” said Vijay Ayyar, head of business development with crypto exchange Luno in Singapore.
Bitcoin’s price has more than quadrupled in the past year, evoking memories of the 2017 mania that first made cryptocurrencies a household name before prices collapsed just as quickly.
“Time to take some money off the table,” Guggenheim Investments chief investment officer Scott Minerd wrote on his verified Twitter account. “Bitcoin’s parabolic rise is unsustainable in the near term.”
Minerd late last month predicted bitcoin could eventually reach US$400,000.
True believers in bitcoin argue the rally this time is different from past boom-bust cycles because the asset has matured with the entry of institutional investors and is increasingly seen as a legitimate hedge against US dollar weakness and inflation risk.
Others worry that the rally is untethered from reason and fueled by vast swathes of fiscal and monetary stimulus, with bitcoin unlikely to ever serve as a viable currency alternative.
“Bitcoin is almost certainly in another bubble and its current growth rate is not sustainable,” Convoy Investments LLC cofounder Howard Wang (王昊昊) wrote in a note on Sunday. “While it may mature in the future, Bitcoin as it exists is largely a speculative asset.”
Bitcoin has shrugged off recent dips and might do so again, potentially recovering to as much as US$44,000 “before the actual correction,” Ayyar said.
Bitcoin was holding near session lows at about US$33,200 as of 7:08am in London. Rival digital assets are also slumping, with second-largest coin ether tumbling as much as 21 percent.
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