Bitcoin’s price surged above $ 50,000 on Monday for the first time since May, but the rebound from a month-long slump later ran out of steam.
The world’s largest cryptocurrency recently fell 0.2% to $ 49,201. It was up to $ 50,562 as investors bet that the prospect of further stimulus spending in the US would lead to further profits and more mainstream financial services companies moved into the emerging asset class.
Bitcoin is up 82% since hitting an annual low of $ 27,700 in January.
According to Edward Moya, senior market analyst at OANDA in New York, the price decline was mainly due to profit-taking, which also cited a report that some bitcoin mining from China could go offline on Tuesday.
Meanwhile, the price of the competing cryptocurrency ether recently rose 1.97% to $ 3,305. The virtual coin is up 91% since dropping below $ 1,740 last month.
The recovery of the cryptocurrency is coming as some more established financial services companies offer their customers access to virtual coins. PayPal Holdings Inc said Monday it would allow customers in the UK to buy, sell and hold Bitcoin and other cryptocurrencies starting this week.
Moya said that fears of capital gains taxation have led some traders to hold cryptocurrencies as a long-term investment, taking some volatility off the market.
“New investors are key to this recent Bitcoin rally and all the signs are that they are comfortable with high risk,” he said in an email, adding that Bitcoin “could see a quick appreciation here and not hesitate.” could run for $ 60,000 with an appetite for risky assets left intact. “
Others also believe the upswing could continue as more retail investors return to the market.
“The last time Bitcoin was $ 50,000, Google trends (tracking website with Bitcoin searches) were much higher than they are now,” said Marcus Sotiriou, a retailer at UK digital asset broker GlobalBlock, in a note.
“This suggests that the retail euphoria has not yet entered the market and that Bitcoin has a long way to go in this market cycle.”
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