Bitcoin prices plummet after reaching new peaks earlier this month.
By Ashima Sethi
Monday saw prices for Bitcoin and other digital coins tank, resulting in the erasure of almost US$ 200 billion from the cryptocurrency market. Last week, the market capitalisation rose past US$ 1 trillion for the first time, and was estimated at a staggering US$ 1.024 trillion on Thursday according to sources from CoinMarketCap.
Bitcoin, the largest and most recognised of the cryptocurrencies, saw a decline of over 10 percent from the day before with its value currently standing at US$ 34,474 and it’s lowest dip hitting US$ 30,863 according to data from CoinDesk. However, Bitcoin is still up approximately 356 percent compared to the last year, hitting an all-time high at almost US$ 42,000 just last week.
It is believed that this plunge comes as a result of a sell-off in cryptocurrencies, with professionals claiming that the US$ 40,000 mark might have acted as a trigger for profit-taking from investors. According to Simon Chen, Executive director of Investment and Trading at Babel Finance, who spoke to correspondents at CNBC, “The correction we saw was expected as we believe the BTC price surge recently from under US$ 20,000 to US$ 40,000 in the past four weeks will induce sell pressure.”
Jehan Chu, founder of Kenetic Capital, was quoted by CNBC explaining that the pullback in Bitcoin’s price presents a valuable buying opportunity for new investors, as long-term bullishness around cryptocurrency has not changed. He explains, “Short term correction is both natural and needed, and is a great entry point for long-term investors as we quickly reach US$ 50k this quarter and US$ 100k by year’s end” In a similar vein, one of the most prominent voices in the crypto-sphere, Chamath Palihapitiya said Bitcoin could go above six digits in the next few years.
Investor Paul Tudor Jones, who now has approximately 2 percent of his wealth in Bitcoin, has called Bitcoin “a great speculation,” as it reminds him a lot of gold in the 1970s, “Every day that goes by that Bitcoin survives, the trust in it will go up,” he explains. Similarly, Raoul Pal, Former Goldman Sachs Fund Manager, has moved 25 percent of his portfolio to Bitcoin following the Covid-19 crisis. It’s undeniable that despite its historical record of volatility, institutional interest in Bitcoin will continue to increase in the months to come.