Bitcoin had a volatile year a few weeks after hitting a record high of nearly $ 42,000
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Bitcoin price was set for the biggest one-week decline since September on Friday morning, after falling 9% since Monday.
Bitcoin, which hit an all-time high of nearly $ 42,000 on Jan. 8, fell to around $ 28,000 in early Asian trading.
But it then rebounded to around $ 32,537 by Friday morning. That means it’s down 9.2% since Monday, making it the biggest weekly drop since the 12% drop in September, according to data from TradingView.
Should price drop back to the Asian session lows, Bitcoin price could be heading for its worst week since plummeting 33% in March 2020.
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Bitcoin came under selling pressure this week after Janet Yellen, Joe Biden’s election as Treasury Secretary, proposed “restricting” the use of cryptocurrencies as they were primarily used for “illegal funding.”
Many analysts have traced Bitcoin’s overnight slide back to a report by BitMEX Research that indicated that the cryptocurrency blockchain had a bug called “double-spend” – when someone could spend the same coin twice.
However, BitMEX later said the double spending might actually have been a different type of less worrying transaction.
Bitcoin has risen sharply in recent months, rising from a 2020 low of under $ 4,000 in March to over $ 41,000 earlier this month. Overall, it has increased by around 290% over the past year.
Cryptocurrency Ethereum rose around 5% to $ 1,250 on Friday morning. That was shy of an all-time high of more than $ 1,430 earlier this week.
Proponents say cryptocurrencies are fast becoming safe havens that can protect investors’ portfolios from the risk of inflation and currency devaluation triggered by the unprecedented fiscal and monetary stimuli sparked during the coronavirus pandemic.
They point to a growing number of institutional investors showing interest in Bitcoin. BlackRock added Bitcoin futures to two of its funds on Wednesday to highlight demand for the currency.
However, regulators and critics have warned that cryptocurrencies like Bitcoin have no fundamental factors affecting their value and are very volatile, meaning investors could “lose all of their money.”
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Nevertheless, market interest has increased sharply in recent months. Some analysts said the recent decline could be an opportunity.
“The current correction is a boon to those who missed the rally in which the cryptocurrency doubled from its previous high, a move from $ 20,000 to $ 40,000,” said Naeem Aslam, chief market analyst at Avatrade.
Craig Erlam, senior market analyst at currency platform Oanda, said, “We may see a small rebound now, just like we did earlier this month.
“But the price movement we’ve seen this month suggests that these levels are a little nervous. It will certainly be an interesting watch for the weeks to come.”