In a turn of events, the largest cryptocurrency Bitcoin and some other digital currencies tanked on the cryptocurrency market on Monday, the 11th of January, downgrading its valuation by approximately $150 billion. As per Coinmarketcap, the cryptocurrency market capitalization slid to $931 billion at around 6.00 pm ET from a revenue of $1.08 trillion recorded a day earlier.
As per reliable sources, the liquidation in cryptocurrencies indicates some profit-taking from investors and reportedly comes after a huge spike. The BTC is still more than 300 per cent up in the past one year, hitting an all-time high of just below $42,000.
According to Babel Finance’s Executive Director of Investment and Trading, Simons Chen, the correction that was witnessed was expected as the company anticipated that the recent surge in the BTC price, from under $20,000 to $40,000, over the last four weeks has instigated the sell pressure. Chen has also added that the $40,000 mark could have been a plausible trigger for profit-taking.
As per data from Coin Metrics, BTC has reportedly registered a fall of more than 10 per cent from a day earlier to $34,200, initially sliding to an intraday low of $30,863. The second largest cryptocurrency, Ether, has also witnessed a 15 per cent downfall to $1,060, shortly falling below $1,000 and hitting an intraday low of $945.
Bitcoin’s recovery can be ascribed to numerous factors, including more buying from large institutional investors. The currency is also considered as analogous to ‘digital gold’, a hedge against inflation, and a potential safe-haven asset.
In the long term, Bitcoin could hit a value of $146,000 in view of its competition with gold as an ‘alternative’ currency, according to JP Morgan. Strategists from the U.S. based bank have, however, added that to reach this price, Bitcoin would have to become considerably less volatile, given that it is known for wild swings in prices.