The cryptocurrency has fallen 11% to less than $ 50,000. At one point on Monday, the digital currency plunged 17% before cutting the worst off the slide. It grew again by around 400% last year, an increase that overshadows other assets.
Treasury Secretary Janet Yellen and co-founder of Microsoft Corp. Bill Gates were the last to weigh in on a digital coin debate. Gates cautioned about how investors can be drawn into fads, while Yellen said Bitcoin is a “hugely inefficient way to conduct transactions.”
In the background, there is concern that the global economic recovery from the pandemic will ultimately prompt central banks to roll back the easy money policies that helped propel Bitcoin higher. Technically speaking, digital currency seems stretched, according to Miller Tabak + Co.
A monthly relative strength index for Bitcoin is “extremely overbought,” the company’s chief market strategist Matt Maley wrote in a weekend note.
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Gates and Yellen engaged in a bitcoin discussion that recently had been dominated by Tesla Inc. CEO Elon Musk. In recent tweets, Musk said Bitcoin prices “seem high,” after calling it the “less dumb” version of cash.
Tesla this month revealed a $ 1.5 billion investment in Bitcoin, while MicroStrategy Inc. increased the sale of convertible bonds to $ 900 million to buy even more token.
Bitcoin devotees argue that digital currency is emerging as a hedge against risks such as faster inflation and should gain more attention from corporate treasurers and institutional investors. Others see speculators playing a bigger role and echo the boom and bust of the digital coin in 2017.
“It’s a pure speculative asset,” said Nader Naeimi, head of dynamic markets at AMP Capital Investors in Sydney.
A pullback in Bitcoin should come as no surprise “given the current over-leveraged long positions in consumer coins,” said Annabelle Huang, partner at Amber Group, a crypto financial services firm.
Bitcoin was trading at around $ 49,720 at 1:17 p.m. in Hong Kong on Tuesday.