Bitcoin slumps below $30,000 in worst weekly loss in many months

As the world went gaga over the overall value of all cryptocurrencies surpassing the $1 trillion mark and Bitcoin crossing the $40,000 mark, the cryptocurrency saw its sharpest fall since September last year, hitting under $30,000 this week and hovering around $31,000 on Friday.

Two weeks ago, Bitcoin hit $42,000, but it is now down 30 per cent from that record high. According to reports, increasing calls for regulation is the reason Bitcoin has crashed so big.

At a US Senate hearing earlier this week, Janet Yellen, US President Joe Biden's nominee for Treasury Secretary, suggested that lawmakers must "curtail" the use of cryptocurrencies such as Bitcoin over concerns that they are being used for illegal activities.

"Cryptocurrencies are a particular concern. I think many are used -- at least in a transaction sense -- mainly for illicit financing. I think we really need to examine ways in which we can curtail their use and make sure that money laundering doesn't occur through those channels," she said.

European Central Bank (ECB) President Christine Lagarde said last week that Bitcoin has been used for some "totally reprehensible money-laundering activity".

This suggests that the Biden administration may be hostile to cryptocurrencies and increase regulation in months to come.

Scott Minerd, Guggenheim Global CIO, said he expects that Bitcoin will retrace back to $20,000, reports Seeking Alpha.

Buyers are aggressively accumulating more and more Bitcoins. This is the driving factor that earlier propelled the price growth of BTC towards all-time high.

The second largest cryptocurrency 'Ethereum' has soared over the past 12 months, after trading above $1,200 for the first time since early 2018.

According to Christopher Wood of Jefferies, Bitcoin represents a legitimate alternative to gold for risk averse capital looking for a store of value. Wood said that Bitcoin was up 305 per cent for the whole of 2020.

In this respect, the total market capitalisation of Bitcoin at the end of 2020 was $539 billion, compared with estimates of $12 trillion in above ground gold, Wood noted earlier this month.

Recently, Bitcoin surpassed Warren Buffet's Berkshire Hathway in market capitalization and only ranks behind Apple, Microsoft, Amazon, Alphabet, Facebook, Tencent, Tesla, Alibaba and Taiwan Semiconductor in global market capitalisation league tables.

--IANS

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