The biggest Cryptocurrency, Bitcoin, set a record high of $34,544.94 on Sunday. That amounts to a gain of more than $10,000 (almost 50%) in two weeks. The currency more than tripled its value since the start of 2020. But today the exchange has fallen to $28,154.11. Monday’s trading is still going on, but as of now Bitcoin fell by more than 17%.
CNBC has explained the rise in demand for Bitcoin and other cryptocurrencies as resulting from bulls who see increased demand from institutional investors, pitching bitcoin as a hedge against inflation like gold amid the unprecedented U.S. coronavirus stimulus.
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PwC’s global crypto leader Henri Arslanian told CNBC’s Street Signs Asia, “When you look at this bitcoin rally that we have been seeing in the last couple of weeks and months, really, there’s two big elements driving it. One is the continuous entry of institutional players.”
“This run is completely different to the one in 2017,” Eric Demuth, CEO and co-founder of cryptocurrency trading app Bitpanda said. “Back then, the price was driven by mainly retail investors. The big players that were once very distant from bitcoin and were outspoken critics are now joining in with the run.”
So what caused the sudden sell off? Adrian Lowcock, head of personal investing at Willis Owen Ltd, told Bloomberg, “Today’s selloff is a reminder this is a relatively new asset, highly volatile, and still yet to find its place in the market. There are many (major) hurdles for it to overcome for it to be a useful mainstream asset.”
And there are many more who are still blockchain skeptics. They would point out that the worldwide Corona crisis and President Trump’s public claims of voter fraud in the American presidential elections are behind what is merely a temporary surge.
People may be scared by the worldwide Corona Virus recession. And when the President of the United States publicly sheds doubt on the legitimacy of American institutions and its very democracy it will certainly cause some to panic and flee the US Dollar.
But as a contributing author rote here in JBN last week, “Due to their decentralized nature of cryptocurrencies, they are seldom affected by social, economic, or even geological issues. It is the very reason for their exceptional performances in times of crisis.”