On the back of a 171% increase in Q4 2020, Bitcoin’s advance has been halted as the price has fallen from US$37 792.47 back down to US$30 000. This is the single biggest drop in its value since March last year.
As many may have expected the upward trend was going to be temporary. Cryptos are, of course, a very volatile asset and this was underscored by Andrew Lowcock head of investment at Wills Owen Limited in a report by 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.”
The cause for this latest dip is anyone’s guess. However, Bitcoin’s fall has seen the second-largest crypto make significant gains. Erethreum saw a 22% increase to US$1 161.36 which is the highest it has been since 2018. Other smaller cryptos like Ripple’s XRP and Litecoin were also on the up with gains of 10% and 12% respectively.
“The long-term outlook for both bitcoin and Ethereum remains skewed to the topside. However, both cryptocurrencies could be at risk of a near-term pullback as their respective surges appear relatively overextended.”Daniel Moss, DailyFX Analyst via Business Insider
In a report by Business Insider, analysts expect a weak dollar, fluctuations on traditional financial markets and a shift to e-commerce could help Bitcoin bounce back.