The price of Bitcoin, the original cryptocurrency, has tumbled by more than 10% shortly after hitting an all-time high.
As of mid-afternoon on Thursday, Bitcoin is valued at around US$17,039, down 11.2% in 24 hours. This is compared to a similar time on Wednesday when it was trading at a record high of almost US$19,400.
Demand for Bitcoin has surged so far this year as a perception among investors that the cryptocurrency is resistant to inflationary pressures and that digital currencies are moving towards mainstream adoption has sparked renewed interest. Since the start of 2020, Bitcoin’s value has increased by 138%.
While the recent decline may just be a result of profit-taking following such a strong rise, those who have been following Bitcoin’s story may be anxious that the market could be in for a repeat of the crash of late 2017, which saw Bitcoin hit a value of just over US$19,000 before plunging to around US$8,700 less than two months later.
The decline has also had the unintended consequence of dragging other major cryptocurrencies down alongside Bitcoin, with Ethereum having fallen 14% since yesterday to US$511 while Litecoin is down 18% at US$71.
Another issue that may ruffle the feathers of investors is the risk of regulation for digital currencies, particularly in the US.
However, there is reason to hope that this decline in Bitcoin may not be as severe as the one in 2017, as use of the cryptocurrency seems to be transitioning towards larger players rather than pure speculators as was the case back then.
Earlier this week, it emerged that payments giant PayPal Holdings Inc (NASDAQ:PYPL) has bought up 70% of all newly issued Bitcoins, while Cash App, owned by Twitter Inc (NYSE:TWTR) founder Jack Dorsey, snapped up the remaining 30%.
PayPal’s move followed an announcement in October that the firm will allow cryptocurrency transactions to be made through its system from next year.