The Elon Musk effect is over, Bitcoin turns down

Last week, Elon Musk’s move on Twitter caused the price of Bitcoin to skyrocket. And this week that momentum has almost completely disappeared.

Last Friday (January 29), Bitcoin price increased 16% to reach $ 38,627 after Musk updated his Twitter account profile to “#bitcoin”. Although up to now this information remains unchanged, the price of the largest digital currency in the world has returned to around 33,600 USD.

Recently, the price of cryptocurrencies has been strongly influenced by individual investor demand – not only volatile, but also formed from discussions on Twitter and Reddit. For example, the Shiba dog-inspired digital currency was originally a joke but soared last week and even reached the top 10 of the market’s biggest coins by market cap before plunging into weekend.

Since hitting an all-time high of nearly $ 42,000 in early January, the price per Bitcoin has dropped by around $ 8,000 but still increases by more than 250% in total in 2020.

Some argue that Bitcoin attracts more investors because it is compared to the equivalent of gold as a hedge against risks such as a weakening dollar or rising inflation. Meanwhile, some others warned that the momentum of the mourning was mainly coming from the wave of bringing money to support Covid-19 to speculate on cryptocurrencies.

John Normand, chief strategist at JPMorgan Chase, said Bitcoin is going to plunge because prices have risen more vertically than any financial asset or asset bubble in the past 50 years.

Consult Bloomberg