Bitcoin has enjoyed a stellar performance over the last few months with record highs, encouraging more people to invest in the apex cryptocurrency. It was only a matter of time till investors took profits, causing the price of Bitcoin to fall by $2000.
If there is no risk, there is no reward. This concept may not ring as loudly today as Bitcoin experiences a fall of $2000, dashing hopes of the cryptocurrency reaching a record high of $20,000.
Cryptocurrency trader John Kramer says,
“It feels more and more like we’re hitting a Bitcoin tipping point,” said John Kramer, a trader at the crypto trading firm GSR. “In fact, a cooldown is to be expected. But with more well-known fund managers and institutions re-examining their Bitcoin theses every day, it’s getting harder to not take the asset more seriously.”
At 8:45 a.m. GMT the price of Bitcoin fell by 11% to $16,725. On the bright side, the price is still up by 21% this month and by 138% on the year. A high of $19,497 was reached on Wednesday, close to the record of $19,666 set in December 2017.
“The stimulus response to the pandemic has stoked lingering concerns among several large asset managers about the devaluation of the US dollar, shining a light on Bitcoin’s finite supply,” Kramer said. “The risk-return relationship for digital assets is now uniquely poised as an attractive alternative that is uncorrelated to wider macro and increases the diversification of a traditional portfolio.”
The fundamentals of Bitcoin should mean that despite the recent fall in price, Bitcoin could rebound and continue on its path to the moon. Studies show that after the creation of the Bitcoin whitepaper, a phase of achieving parity with the USD takes place, following which gold parity is achieved. After this phase, Bitcoin experiences increasing recognition as a financial asset with enhanced legal clarity and greater transactions in financial markets.