File picture: Pixabay
File picture: Pixabay

Bitcoin slides after topping $40 000 for first time

By Reuters Time of article published Jan 8, 2021

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By Kevin Buckland

Tokyo - Bitcoin fell more than 5% on Friday, a day after topping $40,000 for the first time.

The world's most popular digital currency slid to as low as $36,618.36 on Bitstamp exchange, after reaching an all-time high of $40,402.46 in the previous session.

Rival cryptocurrency ethereum sank more than 10% to as low as $1,064.89.

Bitcoin has rallied more than 700% since a low in March. It topped $30,000 for the first time on Jan. 2, after surpassing $20,000 on Dec. 16.

Market participants had warned of a correction after the $40,000 milestone was reached.

Increased demand from institutional, corporate, and more recently retail investors has powered bitcoin's surge, attracted by the prospect of quick gains in a world of ultra-low yields and negative interest rates.

JPMorgan strategists wrote on Jan. 5 that the digital currency has emerged as a rival to gold and could trade as high as $146,000 if it becomes established as a safe-haven asset.

The total market value of all cryptocurrencies rose above $1 trillion for the first time on Thursday as Bitcoin surged to a record high, according to data by crypto coin trackers CoinMarketCap and CoinGecko.

Bitcoin has jumped more than 900% to $38,655 on Thursday, from $3,850 in March, as governments increase speeding to blunt the economic impact of the coronavirus. This has raised fears about rising inflation and U.S. dollar debasement.

The cryptocurrency is also gaining traction with more mainstream investors who are increasingly convinced that Bitcoin will be a long-lasting asset, and not a speculative bubble as some analysts and investors fear.

Sergey Nazarov, co-founder of Chainlink, a decentralized network that provides data to smart contracts on the blockchain, said that there is a “lack of faith in traditional institutions that is driving this large rally towards cryptoassets.”

“While outsiders may view the cryptocurrency industry being valued at over $1 trillion as an incredibly significant milestone, in actuality our space is still in one of its very early stages of development and growth,” Nazarov said.

The market cap of all cryptocurrencies rose 10% to $1.042 trillion on Thursday, data from CoinMarketCap shows. Bitcoin accounts for around 69% of the total market cap of the total. It is followed by Ethereum with a 13% share.

Reuters

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