(Bloomberg) – Bitcoin fell Tuesday after a bout of volatility exposed lingering doubts about the durability of the digital currency’s fascinating rally.
The cryptocurrency was down about 12.5% to $ 48,071 in London to drop below $ 50,000. On Monday the currency lost 17% before reducing the fall. Still, bitcoin has risen 390% in the last year.
US Secretary of the Treasury Janet Yellen and Microsoft Corp. co-founder Bill Gates were the last to speak in a debate on digital currency. Gates warned about how investors can get swept up in the crazes, while Yellen said bitcoin is a very “inefficient” way to transact.
Deep down there is concern that the global economic recovery from the pandemic will eventually lead central banks to cut back on the easy money policies that helped drive bitcoin higher. On a technical level, the digital currency appears under pressure, according to Miller Tabak + Co.
A monthly index of the relative strength of bitcoin indicates that the currency is overbought.
A monthly index of bitcoin’s relative strength is “extremely overbought,” the company’s chief market strategist Matt Maley wrote in a note over the weekend.
Gates and Yellen got into a discussion that had lately been dominated by Tesla Inc. CEO Elon Musk, who tweeted that bitcoin prices “look high,” but also that cryptocurrency is a “less dumb” version of cash. .
Tesla this month unveiled a $ 1.5 billion investment in Bitcoin, while MicroStrategy Inc. increased a convertible bond sale to $ 900 million to buy more Bitcoin.
Bitcoin worshipers argue that the digital currency is a hedge for risks such as faster inflation and is garnering more attention from corporate treasurers and long-term investors. It reminds others of the rise and fall of digital currency in 2017.