The value of bitcoin, the world’s most popular cryptocurrency, has grown by 20% since the beginning of 2021 and approached to $35,000 demonstrating a new historical maximum. As on January 3, 2021, the market capitalization of the cryptocurrency amounted to $640 billion. In terms of this indicator, Bitcoin is almost equal to Elon Musk’s Tesla, whose capitalization is $670 billion.
However, despite the previous phenomenal growth, the price of bitcoin experienced a dramatic decrease on January 4. Bitcoin’s rapid rise has been replaced by an equally rapid decline. This is evidenced by the data provided by Coindesk.
Experts explain that quite often, a sharp movement of the currency rate is followed by the so-called “correction”, when the exchange rate begins to move (at least for a certain period of time) in the opposite direction. As it usually happens with bitcoin, it is pretty difficult to predict in which direction the rate will move further.
Bitcoin has lost approximately 12 percent of its maximum value over the past 24 hours. At the moment, the cryptocurrency costs about $29,850. According to Coindesk, the minimum recorded value on January 4 amounted to $28,200. At the same time, after a sharp drop, there is a rebound in the charts provided by different exchanges.
Bitcoin costs $28,500 at Binance, the largest cryptocurrency exchange in terms of trading volumes. Bitcoin collapsed by more than 15 percent at this exchange.
Traders revealed that the fall of bitcoin value on Monday was not an unusual event for this volatile asset, whose sharp price swings have partly prevented its widespread use as an alternative currency.
In particular, Joseph Edwards representing the cryptocurrency broker Enigma Securities stresses that bitcoin is still inevitably volatile by its nature. Largely, the latest events look like a purely technical growth driven by a short-term euphoria.
Many market experts agree that positive and negative scenarios regarding bitcoin’s growth are now equally possible.
Bitcoin’s growth has been fueled by the expectations that it can serve as a hedge against inflation risks as governments and central banks turn on incentive taps to counter the economic impact of the COVID-19 pandemic.
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