Bitcoin fell sharply on Monday, losing ground from a record high of $34,800 (approximately R511 000) touched a day earlier, with traders citing volatility in highly leveraged futures markets.
Bitcoin fell over 14 percent after earlier touching as high as $33,670 (approximately R494 000), wiping out more than half its 20 percent rally from New Year’s Eve to a record $34,800 (R511 000) on Sunday.
Bitcoin’s record high came less than three weeks after it crossed $20,000 (R294 000) for the first time on the 16th of December. The world’s biggest cryptocurrency more than quadrupled in price last year.
Traders said Bitcoin’s drop on Monday was not unusual for the volatile asset, whose wild price swings have in part prevented it from becoming widely used as a currency.
Fuelling Bitcoin’s rally has been the perception it can act as a hedge against the risk of inflation as governments and central banks turn on the stimulus taps to counter the economic impact of the COVID-19 pandemic.
Bitcoin’s advance has also reflected expectations it will become a mainstream payment method. Its potential for quick gains has also attracted demand from larger US investors.