Bitcoin fell sharply on Monday, losing ground from a record high of $34,800 (€28,300) touched a day earlier, with traders citing volatility in the markets.
Bitcoin fell over 14 per cent after earlier touching as high as $33,670, wiping out more than half its 20 per cent rally from New Year’s Eve to a record $34,800 on Sunday.
Bitcoin was last down 9 per cent at $30,077.
Bitcoin’s record high came less than three weeks after it crossed $20,000 for the first time, on December 16th. The world’s biggest cryptocurrency more than quadrupled in price last year.
Traders said bitcoin’s drop on Monday was not unusual for the volatile asset, whose wild price swings have in part prevented it from becoming widely used as a currency.
“It’s still an unavoidably volatile asset by its nature,” said Joseph Edwards of crypto brokerage Enigma Securities.
“For the most part, this looks like a purely technical move, signalled and caused by short-term euphoria,” he added.
Fuelling bitcoin’s rally has been the perception it can act as a hedge against the risk of inflation as governments and central banks turn on the stimulus taps to counter the economic impact of the Covid-19 pandemic.
“Some of it is reflecting the fear of a weaker dollar,” Bank of Singapore currency analyst Moh Siong Sim said of its most recent rally.
Bitcoin’s advance has also reflected expectations it will become a mainstream payment method. Its potential for quick gains has also attracted demand from larger US investors.