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Bitcoin’s torrid rally lost strength on Wednesday due to widespread risk aversion, posting its largest decline in a month.
The world’s largest cryptocurrency by market value plunged 3.1% to $ 13,201 at 2:40 pm in New York. Alternative currencies, including Litecoin and Monero, also fell, while the Bloomberg Galaxy Crypto Index fell 3.7%.
“This broad trading session of risk aversion is triggering a widespread panic sell, which is seeing every risky asset, such as gold and Bitcoin, really begin to plummet,” said Edward Moya, senior market analyst at Oanda. Corp.
BloombergWednesday’s high of $ 13,857 only slightly exceeded Bitcoin’s most recent peak, set for June 2019. While some charts say Bitcoin could form a bearish double-top pattern, it could also take a break after its reading of the 14-day relative strength index exceeded 70, meaning the coin was overbought.
“I think $ 14,000 is a very key threshold,” Moya said. “Once that level is cleared, there will be a lot more perks here.”
Prior to Wednesday’s hiatus, Bitcoin had gained around 15% since PayPal Holdings Inc.’s announcement last week that it will allow customers to use cryptocurrencies.
But Bitcoin supporters say the coin’s decline may not be a cause for concern. Many argue that cryptocurrencies – and Bitcoin in particular – could possibly benefit in an era of rampant central bank money printing and the potential for an inflationary spike.
“As we see it, something unexpected must reverse the growing adoption of Bitcoin as a digital store of value like gold, or the price has few options but to rise,” wrote Mike McGlone, a strategist at Bloomberg Intelligence, in a Note.
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