Bitcoin closed in on the lowest in three weeks as the leading cryptocurrency’s sizzlying rally gives way to the pessimism that prices are too high. Bitcoin tumbled 5.9 percent on Thursday, sliding below US$33,000. The largest crypto asset has trended lower ever since breaking through US$40,000 amid growing speculation that the market is in a bubble. While the soaring crypto prices fueled a speculative mania among the Robinhood crowd, it’s also made professional investors reluctant to buy at the top.
Bitcoin price hovers around $32,500.
At the time of writing, the leading cryptocurrency is changing hands at just above the $32,600 mark. Currently, the debate continues to rage over Bitcoin’s perceived value, with believers pointing to factors such as institutional interest in the cryptocurrency as an inflation hedge. However, some see the return of another speculative bubble echoing its 2017 collapse. “Bitcoin just entered the danger zone,” wrote Edward Moya, senior analyst at Oanda. “This doesn’t seem like the end for the crypto bubble, you just might need to see Bitcoin drop to US$30,000 level before that institutional money sees value in it,” Moya added.
Institutional interest in bitcoin rises.
One of the main reasons for the recent mammoth rally of bitcoin is the growing institutional interest in the cryptocurrency. Bitcoin’s advance also reflects increasing expectations of it becoming a mainstream payment method, with payment firms like PayPal opening their network to cryptocurrencies. High profile investors like Paul Tudor Jone have been buying bitcoin. Many bitcoin bulls say the cryptocurrency is akin to “digital gold,” a potential safe-haven asset and a hedge against inflation. As reported earlier, Dave Chapman, Executive Director at Hong Kong-based digital asset company BC Group, said that institutional investors see the potential for greater risk-adjusted returns compared to traditional investments.