Bitcoin has delivered a stark reminder of the volatility that has deterred many mainstream investors from the cryptocurrency, dropping heavily in value since the all-time high above $34,000 set on Sunday.
The price of a coin crashed below $30,000 in Monday trading, falling as much as a fifth from that record intraday high. It then recovered some of those losses to recently trade at about $30,100.
Even bitcoin bulls had predicted a retracement after the assetâ€™s most recent surge, as investors look to take profits after a breathtaking run.
The currency increased by as much as a fifth in the first few days of the year, following a more than 300 per cent gain in 2020.
Marc Bernegger, a board member at digital asset manager and broker Crypto Finance,Â was among those who had suggested a â€œhealthyâ€� correction could follow the run-up in prices in the first few days of the year.
But the volatility will revive memories of the boom-and-bust experienced by bitcoin holders three years ago. Economist Nouriel Roubini warned on Twitter last month that retail and institutional investors would again get â€œburnt hardâ€� as a speculation-driven bubble pops.
â€œThe rise in [bitcoin] has no fundamentals,â€� he said in a tweet.
Some bitcoin backers have argued that the assetâ€™s recent rally has seen fewer of the big swings in value that it has long been associated with.
Speaking before the latest plunge, Marcus Swanepoel, chief executive of London-based cryptocurrency platform Luno, said bitcoin â€œwill still have its ebbs and flows, thatâ€™s for sureâ€�.
He added: â€œHowever, relative to even a few years ago, itâ€™s in a better place with regards to volatility than itâ€™s ever been.â€�
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