Bitcoin and Cryptocurrency Trading Concept Photo: Getty Images

Cryptocurrency market shrinks by $200bn as Bitcoin loses ground

Alexander Davis | ConsumerConnect

Market analysts say cryptocurrency’s potential is still good, but it’s going to be a long-term investment and not an overnight windfall.

It was gathered that the saying, ‘what goes up must come down’, seems to have applied to the digital currency market as the rocket ride that cryptocurrency has been on lately has just come back to earth ─fast and furiously.

In a single 24-hour period, the value of the market shrank so much that estimated $200 billion evaporated, agency report noted.

In particular, Bitcoin (BTC), the largest cryptocurrency, fell close to 22 percent from a day earlier to the $31,000 range.

But then, why the sudden fall from grace? Report indicates the leading reason behind the sell-off is that investors’ wallets were feeling good about the latest rally and were likely doing some profit-taking.

Mind you, Bitcoin isn’t even close to being in the tank ─ it’s still up over 300 percent in the last 12 months and zoomed by $35,000 on its way to an all-time high around $42,000.

Simons Chen, Executive Director of Investment and Trading at cryptocurrency financial services firm Babel Finance, told CNBC: “the correction we saw was expected as we believe the BTC price surge recently from under $20,000 to $40,000 in the past four weeks will induce sell pressure.”

However, other analysts are still bullish on Bitcoin. Many see it as the digital version of gold or silver, which is a potential safe-haven asset and hedge against inflation.

JPMorgan, in a recent research note to its clientbase, also said Bitcoin could eventually hit $146,000, but that’s not going to happen anytime soon.

JPMorgan Chase strategists wrote: “A crowding out of gold as an ‘alternative’ currency implies big upside for bitcoin over the long term.

“This implies that the above $146,000 theoretical bitcoin price target should be considered as a long-term target, and thus an unsustainable price target for this year.”

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