R. Tsubin / Getty Images
Bitcoin’s price has been set to its biggest drop in a week since September on Friday morning, having fallen about 9% since Monday.
Bitcoin – which reached an all-time high of nearly $ 42,000 on January 8 – fell to around $ 28,000 at the start of trading in Asia.
But then it recovered to around $ 32,537 on Friday morning. That means it has fallen about 9.2% since Monday, putting it on course for the biggest weekly drop since the 12% decline in September, according to data from TradingView.
If the price falls back to the lowest seen in the Asia session, the price of bitcoin may be heading for its worst week since it fell 33% in March 2020.
Read More: We talked to the Gemini cryptography platform, supported by Winklevoss, about bitcoin, how to use stable currencies and why regulation will not end the digital currency boom
Bitcoin came under selling pressure this week after Janet Yellen, Joe Biden’s choice for Treasury secretary, suggested that the use of cryptocurrencies should be “reduced” because they were used primarily for “illicit financing”.
Many analysts put the bitcoin night slide in a BitMEX Research report that suggested a flaw called “double spend” – when someone manages to spend the same coin twice – occurred on the cryptocurrency blockchain.
However, BitMEX later said that double spending could in fact have been another type of least worrying transaction.
Bitcoin has skyrocketed in the past few months, rising from a 2020 low below $ 4,000 in March to more than $ 41,000 earlier this month. Overall, it is about 290% in the last year.
The Ethereum cryptocurrency was about 5% higher on Friday morning, to $ 1,250. That was shy of a record high of more than $ 1,430 earlier this week.
Supporters say cryptocurrencies are quickly becoming safe-haven assets that can protect investors’ portfolios from the risk of inflation and currency devaluation triggered by the unprecedented fiscal and monetary stimulus unleashed during the coronavirus pandemic.
They point to an increasing number of institutional investors showing interest in Bitcoin. BlackRock on Wednesday moved to add Bitcoin futures to two of its funds, highlighting the demand for the currency.
Even so, regulators and critics have warned that cryptocurrencies like Bitcoin do not have fundamental factors to boost their value and are highly volatile, meaning that investors can “lose all their money”.
Read More: The chief investment strategist for a money manager focused on the $ 9.6 billion volatility explains why the stock market should become more chaotic in 2021 – and shares how investors can take advantage of it
However, market interest has increased sharply in recent months. Some analysts said the recent fall could be an opportunity.
“The current correction is a blessing to those who missed the high during which the cryptocurrency doubled from its previous high, a move from $ 20,000 to $ 40,000,” said Naeem Aslam, Avatrade’s chief market analyst.
Craig Erlam, senior market analyst at the Oanda exchange platform, said: “We can see a small recovery now, as we saw earlier this month.
“But the price movement we saw this month suggests that there is some nervousness around those levels. It will certainly be an interesting watch in the coming weeks.”