After setting records of success on its 12th Birthday on Sunday, 3rd January, 2021. Bitcoin took a nosedive on Monday and dropped down by $5,000 in a day. This is being marked as the biggest dive in the history of cryptocurrencies. It is also the first in the history of Bitcoin as well.
Bitcoin suddenly tumbled down at $29,000 in the crypto market on Monday.
The reason for the sudden drop was being related to the newest flash crash in the stock markets around the world. However, Bitcoin found its foot, recovered slightly, and has currently been traded around the range of $30,000.
The devaluation of Bitcoin has once again reminded the investors of it being highly volatile and unpredictable. Few days back one of the top analysts was suggesting that Bitcoin may be the next big thing. He also suggested that Bitcoin might replace gold as a medium of saving investment and losses. However, the latest flash crash has proven otherwise.
This is not the first time Bitcoin has taken a dive. Few years back Bitcoin descended a little over $4,000 in a matter of hours. But it has seen even worse crashes in percentage losses.
This unpredictability and volatility of Bitcoin makes it unsuitable to be adopted as an everyday medium of exchange. The limited amount of cryptocurrency makes it a much more compelling investment option. If it is compared with regular currencies, the fiat easily gets devalued due to quantitative easing.
Bitcoin, currently, being limited to a maximum of 21 million coins and this is why it is sometimes called “digital gold”. But in terms of gains, as compared with gold, Bitcoin’s value rose approximately 11 times more than that of gold in 2020.
Bitcoin previously reached over $20,000 at the end of 2017 but was being traded at around $5,000 in March 2020.
Crypto analysts are still optimistic about Bitcoin. They say that due to the current stress over the global economy because of the coronavirus pandemic, Bitcoin still has a long way to go. But the fear is that such highs would be followed by instant drops as well.
Sergey Nazarov, founder of Chainlink, is so optimistic about Bitcoin that he said that Bitcoin may eventually surpass the $100,000 mark.