Once up more than 120% for the year, bitcoin’s dramatic plunge since April means the world’s biggest cryptocurrency is now lagging behind a host of more traditional financial assets in 2021.
- Bitcoin’s 50% plunge since April has put its 2021 returns behind a host of more-traditional assets.
- It now lags well behind commodities and US banks, which have jumped as economies have reopened.
- Bitcoin’s gains were on a par with the S&P 500 and Dow Jones on Tuesday after another sharp drop.
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Bitcoin has lost around 50% of its value since peaking at close to $65,000 in April. It traded below $33,000 on Tuesday, around 13% higher than where it started the year.
The 13% increase put it far behind some of 2021’s biggest risers – particularly commodities and bank stocks, which have jumped as economies have reopened and markets have stayed buoyant.
Lumber prices have rocketed as housing markets around the world have boomed despite the coronavirus pandemic, with the random-length price rising around 40% in 2021. It stood at just over $1,220 per 1,000 board feet on Tuesday, after a fall in recent days.
Copper has also jumped as global manufacturing has picked up again, rising roughly 28% across the year to above $4.50 a pound on the New York Mercantile Exchange.
Even US banks, the bedrock of the traditional economy, were far outperforming bitcoin on Tuesday as a rebound in growth and rising bond yields boosted share prices. The Dow Jones US banks index has risen around 36% since the start of the year after a lackluster 2020.
Bitcoin was down close to 5% on Tuesday morning. Analysts said one explanation was that former President Donald Trump said the crypto asset “seems like a scam” on Fox Business. Another was that the US has recovered a major ransom payment by breaking into a wallet, denting the anti-government case for crypto.
The cryptocurrency could crash again if it falls much further, said Jeffrey Halley, senior market analyst at currency firm Oanda. “Failure of $30,000 will basically put every long position since January 1 in the red, which, I believe, will trigger another capitulation trade,” he said.