what happened
Many investments in the crypto-currency market fell sharply on Friday after a 11.6% drop in bitcoin prices within 24 hours.
|
Company |
Mortgage connection |
Maximum price drop on 15/01/2021 |
|---|---|---|
|
Riots Blockchain (NASDAQ: RIOT) |
Bitcoin mining |
15.2% |
|
CleanSpark (NASDAQ: CLSK) |
Bitcoin mining |
15.1% |
|
Gray scale Bitcoin (OTC: GBTC) |
Investment trust that owns bitcoin assets |
12.4% |
|
Ebang International (NASDAQ: EBON) |
Create specialized bitcoin mining computers |
11% |
|
Marathon Patent Group (NASDAQ: MARA) |
Mining with cryptocurrency |
10.6% |
|
MicroStrategy (NASDAQ: MSTR) |
Convert $ 1.13 billion in long-term cash reserves into bitcoin |
9.0% |
Data source: Yahoo! Finance.
Approximately
Bitcoin prices have largely soared since early October 2020 and in a three-month period rose from about $ 11,000 to more than $ 40,000 per sign. Since peaking on January 9, bitcoin prices have been tumbling for the past week and a half. There was a big drop on Monday 11th January and a fairly steady climb during the rest of this week. Token prices almost reached the $ 40,000 benchmark again before tumbling again today.
Cryptocurrencies have garnered the attention of major investment firms this year, a major reason for the huge gains in bitcoin over the past few months. At the same time, the big names can cause sudden price declines from time to time. Investment firm UBS Global Wealth Management today reminded investors that the bitcoin rally could end in tears. Cryptocurrencies are risky and volatile, and investors may end up losing everything they place in this unproven asset class.
“There is little in our eye to stop the price of a cryptocurrency from going to zero when a better-designed version is launched or when regulation suppresses sentiment,” wrote UBS analyst Michael Bolliger.
That was enough to cause a sobering price drop that also hampered many stocks that followed bitcoin upward.
Image Source: Getty Images.
Now what
Bolliger is right, of course. The regulatory framework for cryptocurrencies is still evolving, contributing to market uncertainty. Investing everything in a single cryptocurrency is a very bad idea, as a better version could replace bitcoin at the top of the pile. I do not say that shall happens, but the risk is not zero percent. If you are investing in cryptocurrencies today, it is probably best to split your holdings between bitcoin and some other reputable names like Ethereum and Litecoin. All the major names fall today, but their performance can vary greatly from time to time.
Do not cry for the bitcoin specialists. With the exception of the micro-cap Ebang International, everyone has performed excellently during the current bitcoin boom. Grayscale Bitcoin Trust has risen 347% over the past 52 weeks and MicroStrategy has risen 331% over the same period. CleanSpark’s share made a profit of 614%. And if you thought the results were impressive, we did not even talk about Riot Blockchain’s yield of 1,964% or Marathon’s crushing 2,374%. This is all after the important cut of Friday.
Cryptocurrencies can be fun, exciting and profitable – but you can also lose sleep due to their risky nature and sudden price drops. You can not bet on these promising assets without taking a big risk. Today has simply not been a good day for bitcoin and friends.