File picture: Reuters/Benoit Tessier
File picture: Reuters/Benoit Tessier

Bitcoin price drops after reaching high of $50K

By Reuters Time of article published Aug 24, 2021

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London - Bitcoin's price surged past $50,000 on Monday for the first time since May, but the rebound from a months-long slump later ran out of steam.

The world's largest cryptocurrency was last down 0.2% at $49,201. It had risen as high as $50,562 as investors bet that the prospect of more U.S. stimulus spending would lead to further gains, and more mainstream financial services firms made moves in the nascent asset class.

Bitcoin has climbed 82% since hitting a yearly low of $27,700 in January.

The price retreat was predominately driven by profit taking, according to Edward Moya, senior market analyst at OANDA in New York, who also pointed to a report that some bitcoin mining from China might abruptly go offline on Tuesday.

Meanwhile, the price of rival cryptocurrency ether was last up 1.97% at $3,305. The virtual coin has risen 91% since slumping to below $1,740 last month.

The cryptocurrency recovery comes as some more established financial services companies offer their customers access to virtual coins. PayPal Holdings Inc said on Monday it would allow customers in Britain to buy, sell and hold bitcoin and other cryptocurrencies starting this week.

Moya said that fears of capital gains taxation has led some traders to hold cryptocurrency as a long-term investment, removing some volatility from the market.

"New investors are the key to this latest bitcoin rally and all signs show they are comfortable with high risk," he said in an email, adding that bitcoin "could see a fast appreciation here and might not hesitate making a run for $60,000 if appetite for risky assets remain intact."

Others also believe the upswing could have further to go if more retail investors return to the market.

"The last time bitcoin was at $50,000, the Google trends (tracking website showing bitcoin searches) was much higher than what it is now," Marcus Sotiriou, a sales trader at the UK based digital asset broker GlobalBlock, said in a note.

"This suggests that retail euphoria hasn't entered the market yet and bitcoin has a long way to go in this market cycle."

Reuters

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