Bitcoin tumbles after Musk hints that prices are excessive
In New York, Bitcoin plummeted more than 16% and back below $50,000, giving up more than $8,000 in a matter of hours after the richest man in the world tweeted his fear that the price had risen too high too fast.
This month, fuelled by Purchase price from Tesla Inc. and institutional investors who claim Bitcoin is an enticing alternative to gold and the dollar, the world’s largest cryptocurrency has been on the rising.
Bitcoin is up more than 60 percent in February alone, causing commentary that the run-up is unsustainable. On Sunday, the digital token reached a new all-time high and came close to exceeding US$59.00
Volatile weekend swings are commonly believed to be powered by individuals who trade the cryptocurrency at home. Thus, as institutional crypto traders who observe regular business hours replied to Musk’s Saturday tweet that Bitcoin prices “seem high,” it is also likely that prices drop on Monday.
Meanwhile, strategists at JPMorgan Chase & Co. have cautioned about the deteriorating liquidity in Bitcoin. “In a note on Friday, strategist Nikolaos Panigirtzoglou wrote that liquidity for the digital coin was lower than for the S&P 500 Index and gold, meaning that, he wrote, “even small flows can have a significant price effect.
According to Neil Wilson, chief analyst at Markets.com, “It should go without saying that Bitcoin’s new investors should be prepared for significant volatility and for prices to fall suddenly and as sharply as they have risen.”