The price of the leading cryptocurrency bitcoin rallied to a fresh all-time high over the weekend, soaring above the $34,000 mark for the first time. That move was followed by a surge in smaller cryptocurrencies such as ether, which passed the $1,000 mark for the first time since February 2018. Bitcoin fell as low as $29,316 at around 5:40 a.m. ET Monday, down 12% in the last 24 hours. However, it soon lifted back above the $30,000 level but was still down over 10%.
“Bitcoin correction will be short-lived.”
“The most likely explanation for a pullback is short term profit taking by traders, rather than long term investors,” Jason Deane, an analyst at crypto advisory firm Quantum Economics, told CNBC. “Given the current sentiment and appetite for Bitcoin, it seems likely that any correction will be short-lived.” The world’s biggest cryptocurrency by market value had a historic rally in 2020, advancing more than 300%. Bitcoin, created over a decade ago, is viewed by advocates as a decentralized digital currency that forgoes the need for any central authority, such as a central bank.
Institutional interest pushes bitcoin to new all-time highs.
Several factors have played a part in the recent upward rally of the leading cryptocurrency. At the time of writing, bitcoin’s price is trading at just above the $31,000 mark. The main reason for this recent rally of bitcoin is the growing institutional interest in bitcoin. Bitcoin’s advance also reflects increasing expectations of it becoming a mainstream payment method, with PayPal opening its network to cryptocurrencies. 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.