Bitcoin Tops $40,000 for The First Time but Experts Warn of Looming Price Correction
Nicholas Otieno Jan 08, 2021 02:00
The price of Bitcoin has rallied to a new all-time high over $40,000 on Thursday, January 7. A price correction is likely to happen, and experts explain why.
Bitcoin surged above $40,000 for the first time on Thursday, January 7, as the cryptocurrency continues the wild rally that has seen it jump over 700% since its low moments experienced during the March crash last year. The world’s most popular digital currency reached as high as $40,402.46 and added 6.1% to its value, before pulling back slightly. Currently, it is trading at $38,199.06 at the time of writing.
Bitcoin climbed to $20,000 on December 6 and hit $30,000 for the first time on January 2. Other altcoins such as Ethereum (ETH) and Ripple (XRP) have also gained value by 1.8% at $1,200 and 31% at $0.32 respectively.
Crypto experts have however warned that a price correction could be imminent after Bitcoin achieved such a great rally.
Gavin Smith, CEO of cryptocurrency consortium, Panxora Group, said:
“While further growth is inevitable, investors should not expect this to move in a straight line. The reality is that bitcoin is far from being a magic money tree, nor is it free from downward price swings. In fact, we can expect dips as sharp as 25% at times as investors periodically withdraw profits.”
The recent surge in the price of Bitcoin occurred as the market capitalization for the entire crypto industry hit $1 trillion on Thursday, January 7. This is according to data released by cryptocurrency trackers CoinGecko and CoinMarketCap.
Meanwhile Glassnode blockchain analytics firm has identified increased interests among retail investors in the past few weeks, with the number of BTC wallets or addresses holding a “non-zero amount” of Bitcoin hitting an all-time high of over 33 million.
The blockchain data and intelligence provider also stated that while interest in Bitcoin and related news coverage issues has increased, it is far from being in bubble territory. Glassnode mentioned that the number of daily news Bitcoin has reached at the moment is still not comparable to the volume witnessed in 2017, therefore indicating that the cryptocurrency is witnessing a strong organic growth in its adoption, though not the kind of “virtual growth typical of a bubble.”
Bitcoin : A Game-Changer in the Financial Market
Increased interest among institutional investors and more recently retail investors has contributed to the surge of Bitcoin price this year. Companies and retail investors are attracted by the cryptocurrency’s potential for quick gains in a world of negative interest rates and ultra-low yields. Many investors see Bitcoin as a hedge against inflation amid huge monetary stimulus being proposed to alleviate the economic crisis triggered by the coronavirus pandemic.
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