The price of bitcoin kept going up and up and up for months — to a high of more than $40,000. Then, on Monday (Jan. 11), the market came crashing down.
CNBC reported that bitcoin (BTC), the largest cryptocurrency by market capitalization, fell over 12 percent from a day earlier, to as low as $30,863. According to Coinmarketcap, the overall value of the cryptocurrency market — or market cap —was $880 billion Monday morning, down from $1.08 trillion a day earlier.
“The correction we saw was expected, as we believe the BTC price surge recently from under $20,000 to $40,000 in the past four weeks will induce sell pressure,” said Simons Chen, executive director of investment and trading at cryptocurrency financial services firm Babel Finance.
“The $40,000 mark could have been a trigger for profit-taking, Chen said,” according to CNBC.
Bitcoin has still gone up in price by 300 percent in the last 12 months.
Ether, the second-largest cryptocurrency, was down 23 percent to $1,005 in price. It briefly tumbled below $1,000, hitting an intraday low of $945, according to Coin Metrics Data.
Views of where bitcoin prices are going vary. David Rosenberg, economist and strategist at Rosenberg Research, told CNBC that bitcoin is a bubble.
On the other hand, Jehan Chu, founder of cryptocurrency-focused venture capital and trading firm Kenetic Capital, said the pullback in bitcoin could be a good time for new investors to buy.
Reporting on bitcoin’s run-up in price last year, The Wall Street Journal said that this occurred along with rising sales prices of stocks and commodities. This occurred because investors went hunting with interest rates ow as central banks sought to stem the pandemic’s economic crisis.
The WSJ said that because bitcoin is considerably more speculative than stocks, junk bonds or even gold, bitcoin has greatly benefited from that speculative environment. Its March 2020 low was $3,867.
Last week (Jan. 7), the cryptocurrency market cap topped $1 trillion.
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