Bitcoin has shed much of the weekend’s stellar gains, as relatively cheap alternative cryptocurrencies play catchup with the crypto market leader.
At the press-time price of around $29,000, is down over 13% on a 24-hour basis, according to . Prices have declined by well over $4,000 in the last two hours, having reached a record high of $34,347 on Sunday.
“Bitcoin is having a much-needed reset. After a period of increased leverage and high [perpetual] funding rates across derivatives platforms, a brief consolidation around these levels is required,” Matthew Dibb, co-founder, and COO of Stack Funds, told CoinDesk.
Trader and analyst Michaël van de Poppe said a correction was overdue after the overextended vertical move.
The cryptocurrency surged by $5,000 to above $34,000 in the first three days of 2021, having rallied by over 165% in the final quarter of 2020. The breakout above $30,000 happened alongside large outflows from the Coinbase Pro exchange, a sign of institutions buying the cryptocurrency, .
“Most likely money is shifting from bitcoin towards altcoins or just temporary profit-taking is causing a price drop,” Poppe told CoinDesk. Investors may have rotated some money out of bitcoin and into relatively cheap prominent alternative cryptocurrencies such as , , and . These coins have outperformed bitcoin in the past 24 hours.
Ether, the second-largest cryptocurrency by market value, rose to 35-month highs above $1,150 early Monday and is currently trading near $920, an 11% gain on a 24-hour basis. At press time, litecoin is changing hands at its highest since April 2018, and is trading at 11-month highs.
Ether was was up 30% during the early European trading hours before it was dragged lower by bitcoin. Other coins have also trimmed gains, but are still outperforming bitcoin.