Bitcoin Plunges Days After Reaching Record High
For some, it looked like the beginning of the end. For others, it was a great opportunity.
Bitcoin’s value took a deep dip over the weekend, falling by as much as 15 per cent Sunday on a cocktail of regulatory concerns, power outages in China that limited mining and accusations of overexcitement.
But Bitcoin bulls big and small saw the weekend drop as an opportunity in the shorter term.
Oluwafisayo Williams, a 32-year-old doctor from Sheffield, UK, viewed the drop as a discount. He started investing in cryptocurrencies earlier this year and now says 100 per cent of his investments are in digital currencies. On Sunday, he said he bought 4,800 pounds (US$6,710) of Bitcoin and now holds around 27,000 pounds worth.
“It’s just a matter of conviction,” Williams said. “If you’re not convinced about Bitcoin, you might make the wrong decisions. If I weren’t convinced about Bitcoin, I might have sold it all.”
On Monday, Bitcoin pared some losses and was trading at around US$55,000 as of noon in New York after hitting a high of US$64,617 on Wednesday.
After a period of relative stagnation, Bitcoin’s value took off in October as mainstream financial companies embraced crypto. Financial advisers started to feel more comfortable with their clients holding some crypto investments, and wealthy investors and family offices also piled in. On Monday, some money managers for the ultra rich were looking at the upside of a price drop.
Christian Armbruester, founder of the Blu Family Office, bought cryptos on the back of the recent slump for his personal account and also advised the same action for clients of his London-based investment firm, which oversees about US$700 million for himself, his family and other wealthy investors.
“I bought a bit,” said Armbruester, who is planning to set up a dedicated crypto fund for Blu to trade the assets. “If you invest in crypto, you have to take the volatility.”
Some people, including CNBC’s Jim Cramer, have decided it’s time to cash in. The TV personality revealed last week that he sold some of his Bitcoin holdings — although he didn’t specify how much, or at what price — and paid off a mortgage.
“I decided to become an apostate,” he said. “I know people are going to be angry with me.”
There were other signals that other prominent investors thought the coin had gotten overheated during the hype around the public-market debut of crypto exchange Coinbase.
“The market got too one way,” long-time crypto advocate Mike Novogratz tweeted Sunday, after the price fell. “We will be fine in the medium term.”
With hindsight it was inevitable😂😂. Markets got too excited around $Coin direct listing. Basis blowing out, coins like $BSV, $XRP and $DOGE pumping. All were signs that the market got too one way. We will be fine in the medium term as institutions coming to the space.— Mike Novogratz (@novogratz) April 18, 2021
Bobby Console-Verma, founder of London-based technology firm 1fs Wealth, said he is now exploring buying again with a focus on cryptos outside of the mainstream coins.
“Any dip in a market is a potential opportunity,” he said. “It’s a trader’s delight.”