Bloomberg
(Bloomberg) -- Bitcoin slumped below $30,000 on Friday, extending a retreat from an all-time high set just two weeks ago and stoking fresh questions about the sustainability of the cryptocurrency boom.The digital coin slid as much as 7.7% to about $28,818 in Asian trading before steadying just above $30,000. Commentators have cautioned that a sustained drop below the latter level could presage further losses. The largest cryptocurrency is on course for one of its worst weeks since the pandemic roiled financial markets in March last year.“This level looks very vulnerable and a break below it is bad news in the near-term for Bitcoin and cryptos in general,” Craig Erlam, senior market analyst at Oanda Europe, wrote in a note Thursday. “I wouldn’t be surprised to see a test of $20,000 before too long.”Bitcoin’s surge to a record of almost $42,000 on Jan. 8 embodied the embrace of risk in financial markets awash with stimulus. Some argue Bitcoin is also becoming a more mainstream investment with a role to play in hedging risks such as dollar weakness and faster inflation. Others see little more than speculative mania since the digital coin has more than tripled in the past year.Pinpointing who is mainly responsible for the Bitcoin rally is one of the many crypto mysteries -- Bitcoin funds, momentum chasers, billionaires, day traders, companies and even institutional investors have all been cited.For instance, Grayscale Investments, which is behind a popular Bitcoin trust, saw total inflows of more than $3 billion across its products in the fourth quarter. This week, BlackRock Inc. dipped its toe into the crypto universe for the first time, saying cash-settled Bitcoin futures are among assets that two funds were permitted to buy.Recent comments by Janet Yellen may be among the reasons for this week’s Bitcoin swoon, said Jehan Chu, managing partner with blockchain advisory firm Kenetic Capital in Hong Kong. In her Senate confirmation hearing, Yellen noted crypotcurrency as an area of concern for terrorist and criminal financing.Describing such fears as “unfounded,” Chu said a “natural correction” is underway and that profit taking won’t “reverse the unprecedented assimilation of Bitcoin into Wall Street’s DNA, leading to $100,000 levels this year.”Some strategists are more skeptical. For instance, UBS Global Wealth Management recently warned that there’s nothing stopping a wipeout in big-name digital currencies eventually amid regulatory threats and central bank-issued competitors.Bitcoin was trading at $31,190 as of 1:09 p.m. in Tokyo on Friday. The wider Bloomberg Galaxy Crypto Index was down some 2.5%. Shares of Asian cryptocurrency stocks, such as Japan’s Monex Group Inc., also slid.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
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