Bitcoin Plunges 17% As Record Rally Succumbs To Valuation Fears | Currency News | Financial and business news

Bitcoin fell 17% on Monday, to less than $ 48,000.

On Sunday, the cryptocurrency hit a record high of $ 58,042, bringing its gain since the start of the year to over 100%. On Friday, it hit a market cap of $ 1 trillion.

Monday’s slide is a sign of mistrust of the cryptocurrency’s rapid rise. Bears have long said that bitcoin is in bubble territory, comparing the recent rally to what happened in 2017, when bitcoin plunged 45% shortly after peaking. In 2020, bitcoin jumped 305%.

Will Hobbs, chief investment officer of Barclays Wealth & Investments, told Insider that he shuns cryptocurrency because of its wild swings – a view shared by many fund managers.

Meanwhile, bitcoin has gained institutional support in recent weeks with announcements from Tesla and Mastercard, among others.

MicroStrategy, the first company to buy bitcoin directly, now has 70,784 bitcoins, worth more than $ 3.5 billion. Michael Saylor, CEO of the enterprise software company, has long advocated bitcoin, viewing cryptocurrency as a hedge against a devaluation of the US dollar.

On Sunday, Saylor said in a Tweeter to its half a million subscribers, “It’s only speculation if you don’t understand the technology or why you need it.”

As for Tesla, Dan Ives, an equity analyst at Wedbush Securities, estimated that the electric car maker had racked up $ 1 billion in profits on its $ 1.5 billion investment in bitcoin.

“Based on our calculations, we estimate that Tesla has so far made around $ 1 billion in profit over the past month from its investment in Bitcoin, given the surge in the price of Bitcoin, which now exceeds a trillion in market value, “Ives wrote in a published memo. Saturday.

Tesla CEO Elon Musk has been a strong supporter of cryptocurrency, more recently describing it as “a less stupid form of liquidity than cash.” On Saturday, Musk acknowledged that the price of bitcoin seemed high.

Many believe that bitcoin’s vertiginous rally could have been driven by buyers seeking to hedge against inflation or simply by people trading cryptocurrency.

Still, some Bitcoin bulls have told Insider they expect the cryptocurrency to rise even more, up to $ 250,000 over the next three years.

Read more: Bank of America Says It’s Buying These 14 Inexpensive Stocks Best Positioned For Strongest Economic Return In Nearly 40 Years