Bitcoin fell 8.7% on Wednesday – just as it neared its highest-ever price – passing $19,000 (£14,241) for the first time since its 2017 collapse.
It was joined by other cryptocurrencies in the drop, all of which had been buoyed in recent weeks by strong demand from institutional investors.
Despite the losses, Bitcoin – which remains the most valuable and popular digital currency – has increased its value by more than 100% this year. Some hedge fund managers have suggested it could hit $100,000 (£75,000) in 2021.
Brian Estes, a chief investment manager at Off The Chain Capital, said: “I have seen Bitcoin go up 10x, 20x, 30x in a year. So going up 5x is not a big deal.” Others have warned such predictions are outlandish.
Kevin Muir, a trader based in Canada, said: “Any hedge fund model on Bitcoin is rubbish. You can’t model a mania. Is it plausible? For sure. It’s a mania. But does anyone actually have a clue? Not a chance.”
