$ 200 BILLION wiped out the cryptocurrency market within 24 hours as bitcoin value fell 22% – but experts believe it is a much-needed reset to avoid “the mother of all bubbles”.
- Cryptocurrency bitcoin rose to an everyday high of nearly $ 42,000 on Friday, falling to just $ 31,000 on Monday, wiping out $ 200 billion from the cryptocurrency market.
- But experts say a 22% drop is a much-needed ‘setback’ to a worrying ‘boom’
- The total value of the crypto-currency market reached $ 1.08 trillion for the first time on January 7 dropped to $ 880 billion by Monday
- Bitcoin jumped more than 900 percent from a recent low of $ 3,850 in March
- Last week, the Bank of America warned that the unsustainable boom could be ‘the mother of all bubbles’.
- Bitcoin was invented in 2009 by anonymous individuals or groups calling themselves Satoshi Nakamoto
More than $ 200 billion has been wiped off the value of the global cryptocurrency market, after bitcoin’s value fell by more than 20 percent in just four days, sounding alarm bells on Wall Street.
Bitcoin prices rose to a new high of nearly $ 42,000 on Friday, with the total market for digital coins estimated at $ 1.07 trillion.
But on Monday, bitcoin’s value fell 22% to about $ 31,000, making the market worth $ 880 million.
However, experts have argued that the sudden drop should be welcomed as a ‘sound correction’ after the 12-year-old cryptocurrency rose to unsustainable, record highs.
The value of Bitcoin has risen by 900% since March, warning the Bank of America ‘the mother of all bubbles’.
Bitcoin’s value fell by 22% in four days, from $ 42,000 on Friday to $ 31,000 on Monday, wiping out $ 200 million of its value, but experts believe it is a healthy recovery
This chart shows the growth in Bitcoin’s value during 2020, a meteoric rise that exceeded $ 20,000 for the first time on December 16th. It hit an even higher high of nearly $ 42,000 on Friday before falling to $ 31,000 on Monday.
Last week, strategists at The Bank of America warned that the rapidly rising price of bitcoin could be ‘the mother of all bubbles’, comparing it to the technological boom of the late 1990s.
Naeem Aslam, chief market analyst at AvaTrade, said the decline was therefore seen as a welcome ‘healthy correction’ that would have been ‘long ago’, as reported by CNN.
James Putra, vice president of product strategy for TradeStation Crypto, added: ‘It’s tight if the price of bitcoin just goes up. This withdrawal was necessary. ‘
Bitcoin first crossed the middle of $ 20,000 in December and rose above $ 30,000 earlier this month; a major setback from a low of just over $ 4000, when the Covid-19 outbreak lowered global financial assets this past spring.
In total, it jumped more than 900 percent from a recent low of $ 3,850 in March.
The massive spending on Covid-related stimulus packages has raised fears of rising inflation and a weakening US dollar, and investors are flocking to bitcoin as a safe haven.
Prior to the crash, JP Morgan, the investment bank JP Morgan, said on January 5 that Bitcoin had emerged as a competitor of gold and could trade as high as $ 146,000 if it became a safe haven.
Many experts remain optimistic about the future of the digital currency invented in 2009 by an anonymous person or group known by the pseudonym Satoshi Nakamoto.
Even with the crash of the weekend, bitcoin will remain 10% higher in 2021.
Research from the University of Cambridge, in the UK, estimates that in 2017, there will be between 2.9 and 5.8 million unique users of a cryptocurrency wallet, most of which use bitcoin.
The cryptocurrency is rising with more mainstream investors increasingly convinced that bitcoin will be a long-term asset, and not a speculative bubble as some analysts and investors fear.