Photographer: Andrey Rudakov / Bloomberg
Photographer: Andrey Rudakov / Bloomberg
Bitcoin resumed its declines on Wednesday, with the digital currency heading for its worst week since March last year, casting doubt on the prospects for the cryptocurrency boom.
Bitcoin fell by 6.8%, to about $ 32,359, before reducing some losses, according to a price composition compiled by Bloomberg. The largest cryptocurrency hit a record high of almost $ 42,000 on January 8, before dropping to a low of around $ 30,300. The Bloomberg Galaxy Crypto Index fell by 7.1%.
Price fluctuations evoke memories of the Bitcoin bubble in December 2017, which was followed by a rapid collapse. They also test recent narratives, such as the argument that Bitcoin is maturing as a hedge against dollar weakness and the risk of inflation, and attracting long-term investors.
An alternative view is that quick money in pursuit of quick gains helped boost Bitcoin’s quadruplication last year, leaving the rise exposed to the risk of these investors withdrawing as momentum wanes.
“Taking some profits off 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 achieve $ 146,000 in the long run as it competes with gold as an asset class if swings in the digital asset are moderate enough to attract more institutional investors, JPMorgan Chase & Co. strategists said this month. They also signaled signs of foam that could lead to a retraction in the short term.