Hold on for dear life! Whiplashed bitcoin claws back some gains to trade up 12% after it plummeted in overnight to a level that marked a 52% drop from its record high
- Bitcoin slides to 52% below its mid-April record high of $64,829
- Volatile weekend trading also saw ethereum slide as crypto rout continued
Bitcoin recovered some ground overnight after slumping to half the level of its record high over the weekend.
By late morning trade in New York, the cryptocurrency had gained around 12 percent in the past 24 hours.
That gain comes after a wild ride the cryptocurrency sent investors on – after it fell as low as $31,180 on Sunday evening – down 52 per cent from the $64,829 it reached on 16 April, according to Coindesk figures.
A sharp overnight bounce back from that trading low saw bitcoin climb back to $37,673 by just after 10 am Eastern Time in New York.
With cryptocurrencies continually trading, weekends often prove to be highly volatile and bitcoin investors had steeled themselves for a rocky ride after last week continued the rout in prices since mid-May.
Bitcoin has seen a sharp decline since mid-May taking the price below 50% of its April high
Ethereum, considered by many to be the next most important cryptocurrency, fell as low as $1,734 yesterday and had recovered to $2,291 this morning. It also stands considerably below its all-time high of $4,383, according to Coindesk.
The tailwinds that sent bitcoin soaring to its record high in mid-April have turned into headwinds in recent weeks, with Tesla founder Elon Musk confounding markets with his tweets.
Musk bought $1.5billion of bitcoin for his company and stated it would take it in payment for cars, before latterly announcing Tesla would no longer accept the cryptocurrency and citing environmental concerns.
The Chinese authorities also announced tighter cryptocurrency regulation was needed late last week and followed this up with a crackdown on bitcoin and other crypto mining.
Over the weekend, asked about the anger he had generated with his bitcoin posts, Musk replied to a tweet stating: ‘The true battle is between fiat & crypto. On balance, I support the latter.’
Bitcoin’s high volatility is not news to long-term crypto investors but there are concerns its rapid slump after racing to a series of fresh highs may have hit newer holders hard
Bitcoin and crypto investors are used to volatility but the rapid 50 per cent decline from its April high has caught many by surprise and there are concerns that those drawn into investing recently by the rapid rise in prices since late last year could have lost substantial sums.
Bitcoin and cryptocurrency is highly volatile and financial planning advice is that such a high risk asset should not make up more than a small percentage of a diversified portfolio.
Jeffrey Halley, Senior Market Analyst, Asia Pacific, at OANDA, said: ‘The circus we know as the virtual currency space continues to snatch headlines. Elon Musk tweeted he remained a believer in cryptos, a handy attitude to have when you are long $1.5 billion of them around these levels, with pesky individuals known as shareholders to answer to.
‘However, China once again showed who was the big fish, signalling a clampdown on crypto-miners.
‘While I am not sure we’ve seen the end of “Peak-Musk,” we did have another roller-coaster weekend of trading, with Bitcoin slumping from $38,000.00 to $31,000.00 before recovering to $35,600.00 as of this morning.
‘Once again, I reiterate, governmental/regulatory risk now represents an existential threat to the virtual currency space. A clean break of $30,000.00 should see another capitulation trade and I can’t see that loss of digital wealth not spilling over into other asset classes, at least temporarily.’
The bitcoin price is almost twice as high as the $19,046 it stood at six months ago and four times as high as the $9,193 it was trading at a year ago.
Ethereum, widely considered the second most important cryptocurrency also declined sharply falling back towards $2,000 after peaking above $4,000 recently
Inflation, moonshot investing and bitcoin true believers
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They through the impact for savers, who now can’t find an account that beats inflation, but explain a trick to get a better rate through laddering.
And Simon discusses what inflation could mean for investors and why the jam-tomorrow growth stocks that have delivered over the past decade may not be the ones to hold for the next ten years.