Bitcoin, the pioneer cryptocurrency, soared to a new all-time high for the first time in over two years, marking a significant milestone in its tumultuous journey. However, the euphoria surrounding this achievement was short-lived, as a wave of profit-taking ensued among traders, triggering a swift reversal in its price trajectory.
The token surged by as much as 2.5% to reach an astonishing $69,191.95 shortly after 10 a.m. in New York. Yet, almost as quickly as it reached this peak, Bitcoin experienced a dramatic plunge, plummeting 14% below the record to $59,317.16.
Zaheer Ebtikar, the founder of crypto fund Split Capital, commented on the situation, noting, “Given that nearly everyone who has ever bought Bitcoin is now in profit, there are decent odds we see some amount of profit taking.”
The volatile price swings witnessed on Tuesday epitomize the inherent boom-or-bust nature of Bitcoin. Its recent ascent had been fueled by bullish bets in the derivatives market, where investors could leverage their positions by up to 100 times. However, with Bitcoin’s sudden reversal, more than $800 million worth of bullish positions were swiftly liquidated in the perpetual futures market, according to data from crypto tracker Coinglass.
Bitcoin’s remarkable resurgence this year can be attributed to several factors, including robust demand from new U.S. exchange-traded funds and anticipation surrounding a reduction in the token’s supply growth. At its peak on Tuesday, Bitcoin had surged approximately 63% since the beginning of 2024, outpacing global stocks and instilling optimism across the digital asset market.
In a remarkable turn of events, Bitcoin’s resurgence owes much to a regulatory body often perceived as hostile to crypto: the U.S. Securities and Exchange Commission (SEC). The SEC’s approval of spot Bitcoin exchange-traded funds in early January, following a legal setback last year, has significantly broadened the accessibility of Bitcoin to the mass market. This regulatory development has been instrumental in rejuvenating the crypto sector following the challenges of 2022, including the bankruptcy of prominent exchanges like Sam Bankman-Fried’s FTX.
The rollercoaster ride of Bitcoin’s price movements serves as a stark reminder of the volatility inherent in the cryptocurrency market, where rapid fluctuations and sudden reversals are commonplace. As traders navigate this unpredictable terrain, the allure of potential profits must be tempered with a cautious approach, mindful of the risks posed by market turbulence.
