Bitcoin has plunged after coming within touching distance of a new all-time high yesterday, with investors second-guessing the cryptocurrency’s recent surge and profit-taking towards the end of a volatile week.
The biggest cryptocurrency was last down around 11.6 per cent to $16,921. It had fallen as much as 13 per cent earlier in the day.
It followed a remarkable surge that saw Bitcoin come within $7 of its all-time record of $19,511, which it reached at the end of 2017. The currency had surged more than 250 per cent over the last nine months.
However, investors lost their nerve today, and cryptocurrencies sold off across the board.
“Bitcoin [is] giving us a timely reminder of the two-way risk that comes with volatile cryptocurrencies,” said Craig Erlam, senior market analyst at Oanda.
“While the old saying goes that markets tend to take the stairs up and the elevator down, with cryptos those stairs are steep and the elevator plunges.”
Bitcoin investors take profit after stellar rise
Analysts said crypto investors were likely taking some profit after Bitcoin neared its all-time high.
Others speculated that a tweet from Coinbase chief executive Brian Armstrong triggered the slide.
He said: “Last week we heard rumors that the U.S. Treasury and Secretary Mnuchin were planning to rush out some new regulation regarding self-hosted crypto wallets before the end of his term. I’m concerned that this would have unintended side effects.”
Bloomberg calculated that other coins including XRP slumped as much as 27 per cent.
Cryptocurrency believers took joy in the soaring price of Bitcoin and other coins, heralding it as evidence that mainstream investors were becoming convinced by non-government regulated currencies.
They argue that record amounts of money printing by central banks, record-low bond yields and huge amounts of economic uncertainty give entities like Bitcoin a viable future as alternative currencies and safe assets.
However, many analysts pointed to this week’s volatility as a reason to be sceptical.