Tuesday, May 30, 2023

Bitcoin drops 20% in worst crash since March

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The week starts off to a bearish start for the cryptocurrency as the price price of Bitcoin fell nearly $ 10,000 from its Friday high of almost $ 42,000, temporarily ending an all-time rally.

On Monday morning, Bitcoin was trading below $ 33,000 – a drop of more than 20% from its recent high – while some other cryptocurrencies fell further.

The fall in crypto value comes in the middle a wider retreat Monday for equities, and a rise in the US dollar.

While Bitcoin’s latest price drop is dramatic in percentage terms, it is very timid annihilate which occurred last spring at the start of the pandemic. In March, digital currency fell almost 60% to a low of around $ 3,800.

This week’s price collapse is also just Bitcoin’s latest long history of accidents, which have defined the currency since its launch in 2009. Other notable setbacks include a drop from $ 29 to $ 2 in 2011, and the bursting of the 2017 bubble, which saw Bitcoin hit nearly $ 3,000 after hitting a record then of nearly $ 20,000.

The current drop in prices does not appear to be tied to a specific event, but rather appears to be a combination of profit taking and simple financial gravity. Bitcoin first broken $ 20,000 in December and has since been on a dizzying run that saw him eclipse $ 40,000 last week.

All this led Bank of America at speculate that Bitcoin’s current race is “the mother of all bubbles”. Other voices of caution include UK financial regulator FCA, which issued a unusual warning on crypto investments which read, “If consumers invest in these types of products, they should be prepared to lose all of their money.”

The FCA warning did not appear to be aimed at Bitcoin, but rather the larger cryptocurrency environment, which has long been marred by overnight businesses and scams.

This week’s price collapse also appears to have had a ripple effect on public companies exposed to crypto prices. These include Riot Blockchain, which makes software for crypto companies, and security firm Microstrategy, which bought hundreds of millions of Bitcoin dollars for its corporate treasury. Shares of both companies were down more than 20% and 10%, respectively, on Monday.

The news isn’t all bad for crypto fans. Last week, JP Morgan predicts that the price of Bitcoin could reached $ 146,000 because more and more large companies are adopting it as an alternative to gold. Meanwhile, longtime bulls – some of whom have likened Bitcoin to the indestructible honey badger – are likely to view the current price as an inevitable correction rather than an existential threat.

More to read absolutely financial cover of Fortune:


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