Bitcoin drops below US$30,000 as head-turning rally stalls

HONG KONG (BLOOMBERG) – Bitcoin fell below US$30,000 (S$39,689) as it continues to retreat from the record highs reached during a furious rally over the past two months.

The world’s largest cryptocurrency dropped as low as US$29,327 as of 8:29am in Hong Kong on Friday (Jan 22), after a slide of almost 11 per cent a day earlier. Commentators have cautioned that a sustained drop below US$30,000 could presage further losses in the wake of last year’s 300 per cent surge.

“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 on Thursday. “I wouldn’t be surprised to see a test of US$20,000 before too long.”

Bitcoin has seen a stellar rally as prices more than doubled after passing US$20,000 for the first time in December. It broke above US$30,000 in early January before peaking close to US$42,000. Volatility then picked up as the digital asset tumbled.

The crypto boom has proved controversial, cheered on the one hand by believers who see Bitcoin becoming a more mainstream investment, but decried by others that see little more than speculative mania.

Grayscale Investments, which is behind a popular Bitcoin trust, saw total inflows of more than US$3 billion across its products in the fourth quarter. Just this week, BlackRock 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.

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