Bitcoin slid as much as 26% over Sunday and Monday in the
biggest two-day slide since March. After dropping as much as 20% during New
York trading hours on Monday, the price continued to fluctuate wildly. Bitcoin
has wiped out about $185 billion in value since Friday, more than the market
capitalization of 90% of individual companies in the S&P 500.
The digital coin rose 4.9% to $35,616 as of 11:30 a.m. in
London, following yesterday’s 11% slide. The latest bout of roller-coaster
volatility recalls past boom and bust cycles including the 2017 bubble, and has
investors debating whether this is a healthy correction or the end of the
latest bull run for cryptocurrencies.
“We think a pull back is healthy,” said David Grider, lead
digital strategist with Fundstrat Global Advisors LLC, who added he doesn’t
think the recent price action indicates that Bitcoin has already topped out.
Just as hard is working out what caused the recent two-day
drop of as much as 26%. For some, a bounce in the dollar may be among the
reasons. The greenback has snapped a prolonged losing streak after rising U.S.
government bond yields bolstered its allure.
“There’s signs that retail investors are taking profit,”
said Ryan Rabaglia, the global head of trading at OSL. “Heightened volatility
is often correlated with an uptick in retail participation.”
At the same time, the world remains awash with monetary and
fiscal stimulus, and some of that wall of money could yet gravitate to crypto
assets. Bitcoin believers continue to tout the digital currency as a viable
hedge for inflation risk and the potential debasement of fiat currencies. Some
forecasts for its long-term price range from $146,000 to $400,000. - Bloomberg