Bitcoin Steadies Near $56,000 After Weekend Rally Evaporates

LAGOS (Capital Markets in Africa) — Bitcoin has given up all the gains made over the weekend when prices reached a record $61,000.

Prices for the largest cryptocurrency shot up on Saturday, only to quickly retreat in the following days. The largest cryptocurrency sank almost 7% on Monday and was little changed on Tuesday, trading around $55,900 during the London morning.

The volatility is due to investors taking some profit after Bitcoin’s recent run, said Vijay Ayyar, head of Asia Pacific with crypto exchange Luno in Singapore. He predicted that prices may bounce back to $62,000 before another slide down.

Crypto traders have been positioning for the arrival of U.S. stimulus checks and betting on some of that money finding its way to Bitcoin. Bitcoin has surged some 1,000% over the past year, a mesmerizing rally that outstripped more traditional assets like stocks and gold.

“We’ll see buying resume, given the stimulus coming in and stock markets starting to look good again,” said Ayyar.

Bitcoin and other cryptocurrencies have returned to prominence over the past year amid signs of broader investor interest, such as Tesla Inc.’s $1.5 billion Bitcoin purchase. Detractors argue the token may be in a speculative bubble spurred by massive stimulus injections.

Drop Expected
The crypto craze is feeding into pockets of the stock market. For instance, stocks linked to the mining and trading of the digital asset are soaring, in some cases outpacing even Bitcoin — U.S.-listed miners Riot Blockchain Inc. and Marathon Digital Holdings Inc. are up more than 8,700% over the past year.

“There will certainly be some correction in Bitcoin and other cryptocurrencies because they have rallied so much in a short period of time,” said Atichanan Pulges, chief financial officer of Bitkub Capital Group Holdings Co., operator of Thailand’s biggest cryptocurrency exchange.

“The long-term outlook remains very bullish, as many more leading financial institutions are considering adopting cryptocurrencies,” Atichanan said.

Source: Bloomberg Business News