Bitcoin plummets 17% for its biggest drop since March as record-shattering rally

• Bitcoin plummeted as much as 17% on Monday, its biggest single-day decline since March.
• The sharp decline comes after bitcoin hit a record high of $34,792.47 on Sunday. The cryptocurrency had soared 59% since the start of December and 305% for full-year 2020.
• Some analysts said that after the stellar gains of the last month, some crypto coins such as bitcoin and Ethereum were due a downward correction.
• Yet Ethereum soared by as much as 22% on Monday as bitcoin faltered.
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Bitcoin plunged as much as 17% on Monday, its biggest single-day decline since March. It fell back below the $30,000 threshold at intraday lows just one session after hitting a record high of $34,792.47.

The cryptocurrency is experiencing severe volatility on the heels of a 171% surge in the fourth quarter of 2020. Bitcoin also notched astronomical gains for the full year 2020, with its 305% return making it one of the top-performing assets of the year. 

Meanwhile, Ethereum – the second-largest cryptocurrency by market capitalization after Bitcoin – rose by as much as 22%, to $1,161.36, its highest level since 2018. Ethereum performed even more robustly than Bitcoin in 2020, with a rise of more than 600%.

“The long-term outlook for both bitcoin and Ethereum remains skewed to the topside,” said Daniel Moss, an analyst at DailyFX. “However, both cryptocurrencies could be at risk of a near-term pullback as their respective surges appear relatively overextended.”

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Despite bitcoin’s Monday struggles, some experts expect a weak dollar, turbulence across traditional financial markets, and a greater shift in business and commerce online to help fuel further gains. A growing number of prominent investors and entrepreneurs have thrown their weight behind it, including Twitter CEO Jack Dorsey, Paul Tudor Jones, and even Ray Dalio, who had previously been something of a crypto skeptic.

A key catalyst in 2020 was online payments company PayPal allowing its users to buy and sell Bitcoin across its platform.  

Other smaller cryptocurrencies have benefited from this same push and on Monday were showing strong gains, with Ripple’s XRP up as much as 10% and Litecoin climbing 12% at Monday highs.

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