Bitcoin is posting its worst week since March last year amid fresh doubts about its legitimacy
Bitcoin has suffered its worst week since March last year amid fresh doubts about its legitimacy.
Prices for the cryptocurrency have fallen 14 percent this week and there are fears that it will decline further.
Bitcoin dropped below USD 30,000 at one point yesterday, before rebounding to USD 32,500. It started the week at $ 37,500.
The reality check for bitcoin comes after it soared to nearly $ 42,000 over Christmas and the New Year as investors stacked up in the asset class.
Many commentators dismissed the rise as a speculative mania at the time as the digital currency rose for no apparent reason.
Bitcoin began to fall on Tuesday after comments from former U.S. Federal Reserve Chairman Janet Yellen – now Secretary of the Treasury under President Joe Biden – who said she wanted to minimize the use of all cryptocurrencies, saying they were “ primarily used for illegal funding. ‘. The comments were a clear statement that the Biden administration will be hostile to bitcoin and step up regulation.
Two weeks ago, ECB president Christine Lagarde said bitcoin had been used for a number of “totally reprehensible money laundering activities.”
And last year, money manager Warren Buffett said that “ bitcoin has been used to illegally move a decent amount of money. ” He also joked that investors should ‘go short,’ because criminals no longer need them to carry cash.
The concerns stem from the fact that bitcoin has no physical form and is not controlled by a centralized authority. This means that they are largely unregulated and untraceable.
Joseph Edwards of cryptocurrency broker Enigma Securities said Yellen’s comments had a significant impact.
But others believe bitcoin is here to stay and the recent price drops are a blip.
Analysts argue that bitcoin can protect against emerging inflation as the world’s central banks have launched massive stimulus programs since the pandemic hit early last year.
Bitcoin has also become a payment method on the High Street, with Starbucks and Whole Foods accepting the coins on an app called Bakkt. And last week, asset manager Blackrock dove its toe into the crypto universe, saying that cash-settled bitcoin futures are among assets two funds were allowed to buy.