In the midst of widespread risk aversion, Bitcoin’s new surge has recently lost momentum, dropping by the most in a month.
As of last night, the world’s largest cryptocurrency by market cap slumped 3.1 percent to $13,201. Declines were also posted by alternative cryptocurrencies, including peer-to-peer cryptocurrency Litecoin and open-source, privacy-oriented Monero.
“This broad, risk-aversion-trading session is triggering widespread panic selling, which is seeing every risky asset, like gold and Bitcoin, really start to plummet,” said Edward Moya, a senior market analyst.
Wednesday’s high of $13,857 only narrowly exceeded Bitcoin’s most recent peak, set in June 2019. While some experts say Bitcoin could be forming a bearish double-top pattern, it also could be taking a breather after its 14-day relative strength index reading passed 70, signifying the coin was overbought.
“I think that $14,000 is a very key threshold,” said Mr. Moya. “Once that level is taken out, there is going to be a lot more upside here.”
Before the recent pause Bitcoin had gained around 15 percent since an announcement last week by PayPal that it would enable customers to use cryptocurrencies.
PayPal, one of the largest online payment processors in the world, is offering its support to cryptocurrency by allowing its customers to buy, sell and hold bitcoin and other virtual coins using its online wallets. The digital payments firm will also facilitate the use of cryptocurrencies to shop at the 26 million merchants on its network sometime in early 2021.
But supporters for Bitcoin say the decline of the coin might not be a cause for concern. In an age of rampant central-bank money printing and the potential for an inflationary spike, many argue that cryptocurrencies, and Bitcoin in particular, may eventually profit.
“The way we see it, something unexpected has to reverse increasing adoption of Bitcoin as digital store-of-value such as gold, or the price has few options but to rise,” Mike McGlone, a strategist, said.