Bitcoin’s big plunge shakes faith in cryptocurrency boom|

The asset value drops 21% in two days, the biggest loss since March

Asteep selloff in Bitcoin is fueling concern that the cryptocurrency bubble may be about to burst. Bitcoin slid as much as 21 per cent over Sunday and yesterday in the biggest twoday slide since March. While the digital token recovered some of the losses during the European session, it was still down for the day.

“It’s to be determined whether this is the start of a larger correction, but we have now seen this parabola break so it might just be,” said Vijay Ayyar, head of business development with crypto exchange Luno in Singapore.

Bitcoin has more than quadrupled in the past year, evoking memories of the 2017 mania that first made cryptocurrencies a household name before prices collapsed just as quickly. Prices almost reached $ 42,000 on January 8 with retail traders and Wall Street investors clamouring for a piece of the action.

Bitcoin slid 12.4 per cent to $ 33,342.26 as of 8.29am in New York.

“Time to take some money off the table,” Scott Minerd, chief investment officer with Guggenheim Investments, said in a tweet from his verified Twitter account. “Bitcoin’s parabolic rise is unsustainable in the near term.” In late December, Minerd predicted Bitcoin could eventually reach $ 400,000.

True believers in Bitcoin argue the rally this time is different from past boombust cycles because the asset has matured with the entry of institutional investors and is increasingly seen as a legitimate hedge against dollar weakness and inflation risk.

Others worry that the rally is untethered from reason and fuelled by vast swathes of fiscal and monetary stimulus, with Bitcoin unlikely to ever serve as a viable currency alternative.