Bitcoin Extends Fall in New Blow to Volatile Crypto Boom

Photographer: Andrey Rudakov / Bloomberg

Bitcoin resumed its decline on Wednesday as the digital coin heads into its worst week since March of last year, casting doubt on the prospects for the cryptocurrency boom.

Bitcoin fell 6.8% to around $ 32,359 before cutting some losses, according to a price composite compiled by Bloomberg. The largest cryptocurrency hit a record high of nearly $ 42,000 on January 8 before falling to a low of around $ 30,300. The Bloomberg Galaxy Crypto Index fell 7.1%.

The price swings bring to mind memories of the Bitcoin bubble of December 2017 which was followed by a rapid collapse. They are also testing recent narratives, such as the argument that Bitcoin is emerging as a hedge against dollar weakness and inflation risk, and attracting longer-term investors.

Another view is that quick money looking for quick wins has helped propel Bitcoin’s quadrupling over the past year, leaving the rally exposed to the risk of these investors pulling back as momentum declines. .

“Withdrawing some profit from the table after an asset – any asset, not just Bitcoin – doubles in value in three weeks is completely understandable,” said Julius de Kempenaer, senior technical analyst at StockCharts.

Bitcoin could reach $ 146,000 in the long run as it competes with gold as an asset class if fluctuations in digital assets are moderate enough to attract more institutional investors, strategists at JPMorgan Chase & Co. this month. They also reported signs of foam which could cause short-term recoil.