Bitcoin posted its biggest single-day drop in nearly two months, amid warnings that novice investors could take big losses speculating in crypto assets such as the Dogecoin ‘same coin’.
Bitcoin fell more than 11% on Sunday, from around $ 62,000 to $ 55,000 – its lowest level since the end of March. Last week, the cryptocurrency hit new records at nearly $ 65,000.
Various reasons for the decline were cited, which followed a strong rally last week. Bitcoin had already weakened on Friday, after Turkey’s central bank banned the use of cryptocurrencies and crypto assets for purchases, citing risks of possible “irreparable” losses.
Data website CoinMarketCap also reported the power outage in China’s Xinjiang region, which is believed to fuel much of bitcoin mining, for sale.
There have also been unsubstantiated reports that the US Treasury may be planning a crackdown on money laundering through digital assets, Bloomberg noted.
Despite the decline, bitcoin was still up over 90% for the year, and nearly five times higher than last October.
Bitcoin’s drop came as Dogecoin – originally created as a joke – also retreated from its last high, after a remarkable increase this year.
Dogecoin has gained over 6,000% since the start of 2021, rising from $ 0.0046 to around $ 0.30 on Sunday, after briefly hitting $ 0.43 on Friday.
Dogecoin was inspired by the popular Doge meme, of a Shiba Inu looking sideways at the camera with raised eyebrows. Interest in the coin was boosted by influential figures such as Tesla founder Elon Musk, who tweeted several dogecoin memes.
Dogecoin fans have been pushing for its price to reach $ 1. The rise of Dogecoin is particularly noteworthy because it was created to satirize the growth of altcoins by turning the internet doge meme into a cryptocurrency.
There is no cap on its supply, unlike bitcoin which has a hard-wired limit of around 21 million coins.
Nigel Green, CEO and founder of the deVere Group, compared the Dogecoin rally to the GameStop mania that gripped the markets in January, when organized retail investors on Reddit put short squeeze on hedge funds.
“In the same way that the GameStop frenzy has been touted as a ‘Wall Street versus the little guy’ fighting game, Dogecoin is billed as a fighting game against well-established crypto giants like Bitcoin,” Green said. .
“We can expect that many newbie retail investors – who may not have the necessary financial resilience – will be burnt out in the Dogecoin frenzy, the same way they did with GameStop,” he said. added Green.
Last Friday, demand for Dogecoin briefly overwhelmed Robinhood’s crypto trading system, the online trading app.
Charlie Bilello, of Compound Capital Advisors, pointed out that after Sunday’s drop there were still nearly 100 crypto assets with a combined value of over $ 1 billion. Bitcoin hit a “market cap” of $ 1 billion last week.
Green adds that traders should resist the “hysteria” induced by social media and look into the fundamentals of different cryptocurrencies.
“It is very difficult to compare Dogecoin with Bitcoin, which runs on revolutionary technology and has a limited supply, which gives it a scarcity value, among other valuable attributes; and Ethereum, which solves real-world problems and provides high-demand business solutions. For these and other reasons, they attract huge institutional investment, ”Green added.