Bitcoin and other digital currencies plunged Thursday, a slide likely to stoke speculation about the durability of the boom in cryptocurrencies.
Bitcoin slumped as much as 8.7%, the most since early August, while digital coins like Ether also tumbled. The Bloomberg Galaxy Crypto Index at one point slid more than 6%.
"Conditions are very massively overbought and bound for a correction," said Vijay Ayyar, head of business development with crypto exchange Luno in Singapore. "So I don't think it's unusual frankly."
Even with the retreat, Bitcoin has more than doubled this year and until recently was knocking on the door of the record high of $19 511 set in 2017. Crypto believers tout purchases by retail investors, institutions and even billionaires, as well as the search for a hedge against dollar weakness amid the pandemic, as reasons why the boom can last.
"It's also not unusual to see a short-term pullback following periods of significant, accelerated gains as traders look to take profits before resetting once volatility subsides," he said. "Once the dust settles, we're back to business as usual with all medium to long-term bullish indicators still in play."