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Bitcoin soared to an all-time high near $70,000 yesterday, before plunging nearly 15 percent.
On a day that highlighted the volatility of cryptocurrencies, bitcoin hit a record high of $69,202 amid growing speculation that it could surpass $100,000 this year.
The rally took it above the previous high of $68,999 reached in November 2021.
But after setting a new record around 3:00 p.m., shortly before 8:00 p.m. it had fallen below $60,000 to $59,387.
The 5 million British investors who own cryptocurrencies will have felt the sudden changes.
Crypto Race: Bitcoin Hits Record High of $69,202 Amid Growing Speculation It Could Break $100,000 This Year
And while the rise to a new high may encourage others to join in, the sudden drop will serve as a reminder that cryptocurrencies remain a risky and volatile asset.
UK regulators continue to insist that anyone who buys cryptocurrency could be left with nothing.
Laith Khalaf, head of investment analysis at broker AJ Bell, warned that consumers should remain vigilant about bitcoin.
“As always, retail investors should not bet their shirt unless they are willing to lose it,” he said.
And Brent Donnelly, trader and president of analytics firm Spectra Markets, said many will see the new highs as an opportunity for “significant profit-taking.”
Having hit its previous 2021 high, bitcoin fell back below $16,000 in the so-called “crypto winter” of 2022.
That’s when the industry became embroiled in scandal following the collapse of crypto exchange FTX and the subsequent conviction of its founder Sam Bankman-Fried for fraud.
But it has risen nearly 160 percent since October last year, including 44 percent in February alone.
Cryptocurrencies received a big boost in January when the US Securities and Exchange Commission approved 11 so-called “exchange-traded funds” (ETFs) linked to their price.
This was seen as a major regulatory breakthrough that brought Bitcoin into mainstream finance.
Gold also hit an all-time high of $2,141 an ounce yesterday, surpassing the previous high of $2,135 reached in December last year.
Bitcoin, gold and other assets have also been boosted by hopes of interest rate cuts in the US and beyond in the coming months.
“Bitcoin’s all-time high marks a turning point for cryptocurrencies,” said Nathan McCauley, CEO and co-founder of cryptocurrency platform Anchorage Digital.
“Traditional institutions were once on the sidelines. Today, they are here in full force as the main drivers of the cryptocurrency bull market.”