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Confidence in crypto wavers as Bitcoin plunges by 26%

Bitcoin slid by 26% on January 10, 2021 as a sudden plunge is recorded as Bitcoin’s biggest dip since March 2020. A lot of investors and users lost their confidence in the crypto boom. According to the cryptocurrency updates by Yahoo! Finance, Bitcoin’s value dropped by about US$185 Billion.

Vijay Ayyar, head of a business development company based in Singapore, said that this event will be used to determine what happens to Bitcoin in the coming months.

‘It’s to be determined whether this is the start of a larger correction, but we have now seen this parabola break so it might just be,’ said Vijay.

According to Matt Maley, chief market strategist at Miller Tabak + Co, this ‘parabolic’ move of Bitcoin will happen more than once and could potentially decrease by 30-60% throughout the year.

‘What happens with all parabolic moves? You see severe corrections. It will still have big declines of anywhere from 30-60%. And it’s going to happen more than once,’ he said.

However, Maley added that he still sees that Bitcoin will rise above in the years to come.

On the other hand, Jehan Chu, founder of a crypto venture capital called Kenetic said this correction is perfectly normal and saw it as an opportunity for first-time investors to purchase their Bitcoins.

‘This short term correction is both natural and needed, and is a great entry point for long-term investors as we quickly reach $50k this quarter and $100k by year’s end,’ said Chu.

‘Time to take some money off the table. Bitcoin’s parabolic rise is unsustainable in the near term,’ he said. Aside from Bitcoin, Ethereum’s value also dropped by 29% in the past 24 hours.

Due to Bitcoin’s bullish movement in the past year, a lot of investors took interest in investing in ‘digital gold’. The UK’s Financial Conduct Authority warned people to prepare themselves for big losses due to the volatility of cryptocurrencies.

‘Investing in crypto assets or investments and lending linked to them generally involves taking very high risks with investors’ money,’ said the FCA.

People in the Financial Conduct Activity are worried about price volatility, lack of protection for consumers, and the complexity of the products offered.

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