Bitcoin slumped as much as 17 per cent to $45,000 on Tuesday, February 23, amid concerns from investors over the cryptocurrency's sky-high valuations, triggering the liquidation of leveraged bets. The world's most popular cryptocurrency faced its biggest daily drop in a month, as it lost steam and fell to the $45,000 mark. Bitcoin was last down 9.84 per cent at $47,930.3 in choppy trading. The massive drop in prices took its losses to over a fifth from a record high of $58,354 hit on Sunday, February 21, and underscored the volatility of the emerging asset. However, the cryptocurrency is still up around 60 per cent this year. (Also Read: Bitcoin Market Cap Hits $1 Trillion, Currency Soars To Record High Of $ 57,000: 10 Points )
Meanwhile, ether, the world's second-largest cryptocurrency by market capitalisation that often moves in tandem with bitcoin, also slumped more than 20 per cent to $1,410, down over 30 per cent from its last week's record peak. Billionaire Elon Musk's electric vehicle company Tesla Inc's $1.5 billion investment in bitcoin this month, helped in vaulting the cryptocurrency above the historic $50,000 mark. (Also Read: Bitcoin Crosses $50,000 In Historic Win, Gains Further Mainstream Acceptance: 10 Points )
Bitcoin has registered a broader bull run since October 2020, after US online payment firm PayPal allowed the use of bitcoin over its network. After Tesla's investment, several other corporate majors such as BNY Mellon. MicroStrategy also took a leap towards the digital currency, leading to a further surge in bitcoin's prices. The cryptocurrency's rapid gains in recent months have led to calls from financial regulators and governments for tighter regulation. (Also Read: Bitcoin Stays Above $50,000 As MicroStrategy Seeks $600 Million To Raise Stakes )
According to analysts, bitcoin's high volatility is among reasons that it has so far failed to gain widespread traction as a means of payment - an expectation that has in part fuelled its broader rally. They added that with a few fundamental factors by which to judge bitcoin's value, the key price levels would play a large part in determining the direction of crypto markets. (Also Read: After Bitcoin Crosses $50,000, What's The Status Of Cryptocurrencies In India? )
“After reaching an all time high of $ 58,000, Bitcoin saw a price correction today. This was expected as markets go through such correction cycles. However the market showed signs of recovery after falling nearly 17%. Investments in Bitcoin, like any other asset, should be from a long term perspective as the fundamentals are still going strong. Hence it is advised that investors buy the dips and hold with a long term perspective,'' said Sumit Gupta, CEO & Co-Founder, CoinDCX.