After reaching a new record high of $61,556.59 on Saturday, bitcoin lost altitude on Monday, falling as low as $54,790.33 amid profit-taking and weak buying pressure from institutional investors, Coindesk reported.
The No. 1 cryptocurrency bounced back up to $56,339 later Monday as of this writing.
Bitcoin has risen more than 1,000 percent in the past year, thanks in part to increased institutional and corporate interest along with speculative demand. Bitcoin miners, brokers and companies have invested in the token, and their fortunes are increasingly tied to it, according to Bloomberg.
Some argue that bitcoin’s rally is a massive stimulus-fed bubble destined to burst like it did in the 2017-2018 boom-and-bust cycle. Others say bitcoin is a store of value, a form of digital gold that can act as a hedge against inflation and a weaker dollar.
“This looks like a normal consolidation after a big rally,” said Nick Jones, CEO at crypto wallet and exchange Zumo. “We believe that gains seen by Bitcoin and many other cryptocurrencies this year will be sustained although as always with crypto, it won’t be a steady curve.”
Blockchain analytics firm CryptoQuant measures the spread between Coinbase’s BTC/USD pair and Binance’s BTC/USDT pair.
Its Coinbase premium indicator was negative over the weekend when bitcoin broke above $60,000 and remained marginally positive mid-morning Monday, implying weak institutional demand, Coindesk reported.
“A positive spread implies increased demand from high-net-worth investors and institutions, as these entities prefer to trade via regulated exchanges with over-the-counter desks such as Coinbase,” Coindesk reported. “The spread has been significantly higher previously as prices surged above the major psychological levels of $20,000, $30,000, $40,000, and $50,000.”
Market analyst Lark Davis Tweeted that “Whale addresses holding 1,000 or more bitcoin have been selling, this does not mean the bull run is over, it just means that profit taking is happening.”
In some recent whale activity, coins from 2013 were being moved for the first time, said Greg Waisman, the co-founder of the global payment network Mercuryo, in an email to Bloomberg. Such events, he said, usually lead to selloffs.
Some strategists and industry participants say the current bull run is different. Tesla invested $1.5 billion in bitcoin and Elon Musk endorsed it on social media. Billionaire investor Mike Novogratz, who runs Galaxy Digital Holdings Ltd., and others have said that bitcoin could reach $100,000 by the end of 2021.
“Stimulus checks, Elon Musk’s relentless support, short-sellers throwing in the towel, and weekend liquidity were just what was needed to send bitcoin above the $60,000 level,” said Ed Moya, senior market analyst at Oanda Corp. “Bitcoin once again seems to be an unstoppable force and no one wants to get in the way of this momentum trade.”
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