The cryptocurrency bubble could be set to burst as Bitcoin suffered a serious fall in value, with investors scrambling to sell.
At the start of the year, it was setting record breaking numbers, surging past $42,000 for the first time in history.
Many investors were backing Bitcoin to become a mainstream method of payment, especially when PayPal started to offer the cryptocurrency in October 2020.
But in the space of 24 hours, Bitcoin has been struck by a 23% drop in value, falling to $31,800.
The digital coin had more than quadrupled in value since the start of 2020, with the currency’s total value surging past $US600 billion ($A780 billion).
But since Friday, Bitcoin has been wiped of $US180 billion ($A240 billion) in value.
Lesser known cryptocurrencies fared even worse than Bitcoin. Ether lost 29% in 24 hours after peaking at $1,300 two days ago before falling to $980, while Bitcoin Cash and Litecoin also suffered large losses.
RELATED: Bitcoin’s record history high
The UK’s financial watchdog issued a stark warning about cryptocurrency on Monday, due to concerns around consumer protection, price volatility, product complexity, charges and fees and marketing materials.
“If consumers invest in these types of products, they should be prepared to lose all their money,” the UK Financial Conduct Authority said.
There is no guarantee that cryptoassets can be converted back into cash, the regulator also cautioned.
“Converting a cryptoasset back to cash depends on demand and supply existing in the market,” it said.
RELATED: When you should buy Bitcoin
Scott Minerd, chief investment officer at global firm Guggenheim Investments, had predicted Bitcoin could reach highs of $400,000 one day, but tweeted on Monday that it was “time to take some money off the table”.
“Bitcoin’s parabolic rise is unsustainable in the near term,” he wrote.
But Chad Steinglass, head of trading at digital assets firm CrossTower, said while fear of missing out had driven frenzied buying of Bitcoin, equally a surge in selling could also spook investors.
“As retail investors are reminded of the fact that prices can indeed go down and are not just a one way rocket ship, the mental perception of risk premium shifts and the fear of missing out gives way, at least marginally, to the fear of suffering losses,” he told Forbes.
Mr Steinglass said there was a possibility new institutional money and retail players could invest this week, balancing out current losses.
The post Bitcoin value drops sharply, price forecast, when to sell, when to buy appeared first on TechFans.