Bitcoin lost all its gains from the weekend trading as analysts questioned whether the leading cryptocurrency is overheated. Bitcoin prices dropped as much as 8.2 percent during the European session, falling back to around $53,000, as reported by the Korea Herald. The world’s leading cryptocurrency by market cap has been on a tear this month, propelled by Tesla and institutional investors’ purchases. Institutions are starting to believe that Bitcoin is an attractive alternative to gold and the dollar.
Bitcoin briefly touched $59,000 over the weekend.
In February alone, Bitcoin is up more than 60 percent, prompting commentary that the run-up is excessive. The digital token hit a new all-time high on Sunday and came close to surpassing $59,000. It’s widely believed that volatile weekend swings are driven by retail holders trading the cryptocurrency at home. So it’s also possible that prices fell on Monday as institutional crypto traders, who follow normal business hours, responded to Elon Musk’s Saturday tweet that Bitcoin prices “seem high.” “Mostly, it is down to a massively long speculative market, combined with Elon Musk saying it looks a bit overdone,” said Jeffrey Halley, senior analyst at Oanda Corp.
Bitcoin continues to gain mainstream exposure.
Bitcoin has witnessed a massive rally this year as its price reached new all-time highs day after day. With its massive winning rally, Bitcoin also gained mainstream popularity after major companies like Tesla invested in the leading cryptocurrency. JPMorgan Chase & Co. strategists Nikolaos Panigirtzoglou wrote in a note on Friday that liquidity for bitcoin was lower than that for the S&P 500 Index and gold, meaning “even small flows can have a large price impact.”