Bitcoin, the volatile digital currency that briefly became a trillion-dollar market, plunged Wednesday as its monthlong slide morphed into a frenzied selloff.

Cryptocurrencies have surged over the past year on a wave of speculative excitement, spurred by famous backers as varied as Elon Musk, Paul Tudor Jones and Snoop Dogg.

That gave the small but growing crowd of bulls a feeling of inevitability that cryptocurrencies would mature into a significant asset class in their own right. Bitcoin, they wagered, might even fulfill its initial vision and become a legitimate alternative currency.

That gave the small but growing crowd of bulls a feeling of inevitability that cryptocurrencies would mature into a significant asset class in their own right. Bitcoin, they wagered, might even fulfill its initial vision and become a legitimate alternative currency.

But the same momentum that drove prices higher is now sending them relentlessly lower.

Bitcoin, which traded around $7,000 at the beginning of 2020, peaked at $64,829 in mid-April. Since then, it has fallen 41% to $38,390 as of 5 p.m. ET Wednesday and earlier in the day dropped as low as $30,202.

Many people have been tempted to invest purely because it has gone up in value and they have a fear of missing out,” said Rick Eling, investment director at wealth management firm Quilter. “Bitcoin is a volatile asset, and as we have seen so often in financial markets, boom is almost always followed by bust.”

One of the stock market’s charge has stalled as well. Many of the momentum stocks, such as TeslaInc. and GameStop Corp. that investors piled into betting they could only go up, have run out of steam as investors worry about an eventual tapering of the Federal Reserve’s easy-money policies.

The Dow Jones Industrial Average closed down 164.62 points, or 0.5%, Wednesday, paring an earlier drop of as much as 587 points, as investors broadly retreated from riskier assets. The index has fallen in six of the past eight sessions.

The recent price fall has accelerated after three Chinese entities published a statement that financial institutions shouldn’t accept virtual currencies for payment or provide services using them. China has in the past issued other restrictions on cryptocurrencies, which seemingly have had little success in stanching demand among Chinese citizens. Still, the new ban and the reaction shows the crypto market is still sensitive to regulatory efforts.

 

Disclaimer: Opinions expressed here are those of the writers and do not reflect those of Youngmaya.com. Youngmaya.com accepts no responsibility legal or otherwise for their accuracy of content. Please report any inappropriate content to us, and we will evaluate it as a matter of priority.

For Promotion And advertising Contact (+233) 0549156794 / +233502474362

LEAVE A REPLY

Please enter your comment!
Please enter your name here