Bitcoin plunges 17% as record-shattering rally succumbs to valuation fears | Currency News | Financial and Business News

Bitcoin even fell 17% on Monday to below USD 48,000.

On Sunday, the cryptocurrency hit a record $ 58,042, bringing its year-to-date profit to over 100%. It hit a market cap of $ 1 trillion on Friday.

Monday’s slide is a sign of caution with the rapid rise of the cryptocurrency. Bears have long said Bitcoin is in bubble territory, comparing the most recent rally to that of 2017, when Bitcoin fell 45% shortly after hitting highs. In 2020, Bitcoin rose 305%.

Will Hobbs, the chief investment officer of Barclays Wealth & Investments, told Insider that he is staying away from cryptocurrency because of its wild swings – a view many money managers share.

Bitcoin has now received institutional support in the past few weeks, including announcements from Tesla and Mastercard.

MicroStrategy, the first company to buy bitcoin directly, now owns 70,784 bitcoin, valued at more than $ 3.5 billion. Michael Saylor, the company’s CEO for enterprise software, has long been a champion of Bitcoin and sees the cryptocurrency as a hedge against a depreciation of the US dollar.

On Sunday, Saylor said in a tweet to his half a million followers, “It’s only speculation if you don’t understand the technology or why you need it.”

For Tesla, Dan Ives, a stock analyst at Wedbush Securities, estimated the electric car maker had made $ 1 billion in profit on its $ 1.5 billion Bitcoin investment.

“Based on our calculations, we estimate that Tesla made approximately $ 1 billion in profit on its Bitcoin investment last month, given the skyrocketing price of Bitcoin, now exceeding a trillion market values,” Ives wrote in a published article Note Saturday.

Elon Musk, CEO of Tesla, was a vocal supporter of the cryptocurrency, most recently describing it as “a less stupid form of liquidity than cash”. On Saturday, Musk admitted that the price of Bitcoin seemed high.

Many believe that Bitcoin’s dizzying rally could be driven by buyers looking to hedge against inflation or simply by people trading the cryptocurrency.

Still, some bitcoin bulls have told insiders that they expect the cryptocurrency to climb even further, up to $ 250,000 over the next three years.

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