“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 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. Prices almost reached $42,000 on Jan. 8 with retail traders and Wall Street investors clamoring for a piece of the action.
Bitcoin slid 6.2% to $35,555.59 as of 10:37 a.m. in London.
“Time to take some money off the table,” Scott Minerd, chief investment officer with Guggenheim Investments, said in a tweet from his verified Twitter account. “Bitcoin’s parabolic rise is unsustainable in the near term.” In late December, Minerd predicted Bitcoin could eventually reach $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 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.
With so many investors wanting to get rich on Bitcoin, the asset is drawing the attention of regulators. On Monday, the U.K.’s financial watchdog issued a stark warning for consumers looking to profit from crypto: be ready to lose everything.
“Investing in cryptoassets, or investments and lending linked to them, generally involves taking very high risks with investors’ money,” the Financial Conduct Authority said in a statement. The FCA’s concerns include price volatility, the complexity of products offered and the lack of consumer protection regulation around many of the products.
Read: Does Bitcoin Boom Mean ‘Better Gold’ or Bigger Bubble? QuickTake
–With assistance from Mark Cranfield.
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This article gives the impression that the selloff will continue, and uses language about ‘bubbles bursting’. It won’t and after 9 years one cannot not talk of Bitcoin being a ‘bubble’ with a straight face. It is a correction. Even after the correction of the past 2 days, the value of Bitcoin has gone from $4k to $32K in about 9 months. The list of previously risk-averse institutional investors now pouring into Bitcoin as viable store-of-value ranges grows daily, from Goldman to Fidelity to Michael Saylor to Greyscale and a long list of other banks, large and trusted investors and high net worth individuals and corporations and now (reputedly), Elon Musk. This means there is a built institutional floor on the price. A simple look at the last 2 days actions on crypto derivative exchange, the dynamics of the sell and short walls and the avg volume of trades makes it likely that this price movement is shakeout effect of small trades on the spot market.
Well said.
This article can, at best, be described as alarmist. This current bull-run has been expected and predicted extremely accurately. The sell off is a normal part of an overbought market and will mostly likely be followed by a sustained period of consolidation, which then opens the door for new highs in the future.
The above is the next evolution in a 10-year long growth cycle which can continue for years to come. It’s not a bubble. Bubbles don’t burst (as claimed several times previously) and then magically re-inflate.
Bitcoin and whatever it evolves into in the future is fundamentally changing the nature of money, permanently.
Get in or get left behind.