The price of bitcoin has bounced back from the lows seen at the beginning of the week, when the world’s top cryptocurrency plunged around 20 percent amid massive outflows from the crypto market.
Bitcoin started to climb back to the psychologically important $40,000 mark and briefly traded above it on Thursday, according to CoinDesk data. The most popular digital currency, which accounts for around 70 percent of the entire market, slid to $38,547 as of 10:30am GMT on Friday, but was still up around half a percent over the 24-hour period.
Most of the other top cryptocurrencies also rose on Friday, with the second-largest cryptocurrency, ethereum, adding over seven percent.
Bitcoin has smashed one record after another since the start of the year and reached its new all-time high of $41,940 last week. It started to plummet on Sunday and fell even deeper on Monday, losing around quarter of its value in a 24-hour period to trade just above $30,000.
The drop, accompanied by the losses of others, wiped out nearly $200 billion from the cryptocurrency market.
“It should come as no surprise to anyone that Bitcoin has bounced back so quickly,” senior market analyst at Oanda Europe Craig Erlam said as quoted by Bloomberg. He pointed out that the asset has always been extremely volatile, and this time only the absolute numbers are different due to the recent enormous gains.
Some crypto bulls say bitcoin will overcome this volatility to surge in the long term. If it manages to avoid these wild swings, bitcoin could be worth $146,000, JPMorgan previously predicted.
However, critics still say that the world’s top crypto asset rose too fast, warning of a huge bubble. A strategist at Bank of America Securities, Michael Hartnett, earlier said bitcoin looks like “the mother of all bubbles,” and its rally may be another case of speculative mania. He explained that the digital currency skyrocketed roughly 1,000 percent since the beginning of 2019, while other assets such as gold were not even close to such gains in the past few decades.
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