The white-knuckle Bitcoin ride took a different turn on Monday as the worst two-day fall in the digital currency since March raised concerns that the polarizing cryptocurrency boom may be turned upside down.
Bitcoin, the largest cryptocurrency, fell a whopping 21% on Sunday and Monday to just $ 32,389. That’s the biggest two-day drop since global markets were first hit by the pandemic last year, following a record high of nearly $ 42,000 on Jan. 8.
“It has yet to be determined if this is the start of a larger correction, but we’ve seen this parabola break now, so it could be,” said Vijay Ayyar, head of business development at crypto exchange Luno in Singapore.
Bitcoin’s price has more than quadrupled in the past year, bringing back memories of the 2017 mania that first made cryptocurrencies a household name before prices collapsed just as quickly.
“Time to get some money off the table,” Scott Minerd, chief investment officer at Guggenheim Investments, said in a tweet from his verified Twitter account. “Bitcoin’s parabolic surge is unsustainable in the short term.”
Minerd predicted in late December that Bitcoin could eventually reach $ 400,000.
True believers in Bitcoin argue that the rally is different this time around from previous boom-bust cycles as it has actively matured with the advent of institutional investors and is increasingly seen as a legitimate hedge against dollar weakness and inflation risk. Others worry that the rally is unrelated to reason and fueled by massive amounts of fiscal and monetary stimulus, with Bitcoin unlikely to ever serve as a viable currency alternative.
“Bitcoin is almost certainly in a different bubble and the current growth rate is not sustainable,” Howard Wang, co-founder of Convoy Investments LLC said in a Jan. 10 note. “While it may mature in the future, Bitcoin as it exists is largely a speculative asset.”
Read: How Bitcoin relates to the great bubbles of history
Bitcoin has pulled off the recent declines and could do so again, possibly rebounding to as much as $ 44,000 “before the actual correction,” Luno’s Ayyar said.
Bitcoin was at about $ 33,200 as of 7:08 a.m. in London near session lows. Rival digital assets are also declining, with second-largest currency, Ether, falling a whopping 21%.
Read: Does Bitcoin Boom Mean ‘Better Gold’ or a Bigger Bubble? QuickTake
– With the help of Mark Cranfield
(Updates with additional details and comments from Minerd.)