Bitcoin plunges after hitting record highs

Lesser known cryptocurrencies fared even worse than Bitcoin, with Ether losing 29% in 24 hours, while Bitcoin Cash and Litecoin also suffered large losses

The cryptocurrency bubble could be set to burst as Bitcoin suffered a serious fall in value, with investors scrambling to sell.

At the start of the year, it was setting record breaking numbers, surging past $42,000 for the first time in history.

Many investors were backing Bitcoin to become a mainstream method of payment, especially when PayPal started to offer the cryptocurrency in October 2020.

But in the space of 24 hours, Bitcoin has been struck by a 23% drop in value, falling to $31,800.

The digital coin had more than quadrupled in value since the start of 2020, with the currency’s total value surging past $US600 billion.

But since Friday, Bitcoin has been wiped of $US180 billion in value.

Lesser known cryptocurrencies fared even worse than Bitcoin. Ether lost 29% in 24 hours after peaking at $1,300 two days ago before falling to $980, while Bitcoin Cash and Litecoin also suffered large losses.

The UK’s financial watchdog issued a stark warning about cryptocurrency on Monday, due to concerns around consumer protection, price volatility, product complexity, charges and fees and marketing materials.

If consumers invest in these types of products, they should be prepared to lose all their money, the UK Financial Conduct Authority said. There is no guarantee that cryptoassets can be converted back into cash, the regulator also cautioned. Converting a cryptoasset back to cash depends on demand and supply existing in the market.

Scott Minerd, chief investment officer at global firm Guggenheim Investments, had predicted Bitcoin could reach highs of $400,000 one day, but tweeted on Monday that it was “time to take some money off the table”.