Bitcoin (BTC-USD) resumed its slide against the dollar on Tuesday after some brief respite.
The world’s biggest cryptocurrency fell over 9% against the dollar by mid-afternoon in London to trade near $32,700. Bitcoin was around 20% below where it stood on Friday when it reached a new all-time high above $41,000.
Tuesday’s fall extends a sell-off that began on Sunday evening. Overnight into Tuesday, Bitcoin had rallied slightly, climbing off a low near $31,200 reached during Monday’s session. For much of Tuesday bitcoin hovered around the $35,000 mark but the sell-off resumed as US investors began waking up.
Bitcoin had had surged over 300% in a matter of months up to the end of last week. In recent days analysts had begun to to predict a correction given the spectacular run-up.
David Grider, lead digital strategist at Fundstrat, said the price declines of the last few days were likely driven by profit taking.
“We don’t think the retracement was indicative of a bull market top – to be clear we firmly believe the fourth crypto bull market remains intact,” Grider wrote in a note sent to clients on Tuesday.
“We think the sell-off was simply a combination of 1) traders taking profits after 50%+ gains in under two weeks, 2) an uptick in treasury yields and dollar strength, and 3) modestly negative news out of the U.K.”
On Monday, the UK’s Financial Conduct Authority issued a notice warning investors they should be prepared to lose all their money if they invest in cryptocurrencies.
“This is true of most speculative assets, particular crypto and can happen just as easily in more established assets as shareholders in banks and retailers can attest over the past fifteen years,” said Michael Hewson, chief market analyst at CMC Markets.
“The FCA is certainly sensible in explaining the risks to consumers, however their warnings appear unlikely to dim the allure of an asset that has still risen over 50% since breaking above $20k on the 16th December, and which investors can gain exposure to in fractional amounts, thus minimising their overall exposure.”
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