Bitcoin 's price recovered on Tuesday to about $36,000 after sliding to about $30,000 on Monday ascryptocurrency volatility continued.- The superstar investor
Mark Cuban said in a tweet that the price increase of more than 340% in the past year was "EXACTLY like the internet stock bubble" of the 1990s. - Cuban said Bitcoin and
Ethereum could ride out the bubble bursting and thrive. Other analysts, such as those at UBS, were more skeptical. - Visit Business Insider's homepage for more stories.
Bitcoin rose on Tuesday to about $36,000 as the cryptocurrency market recovered from Monday's plunge. But volatility remains high, and the superstar investor Mark Cuban described the recent rise as a "bubble" that could be ruinous.
Bitcoin fell as much as 20% on Sunday and Monday, to just above $30,000, in a wave of profit-taking after the currency's spectacular rally. Investor nerves and a stronger dollar also hit
But its price rose sharply on Monday evening and Tuesday morning, climbing roughly 8% and breaching $36,000 once again. It reached an intraday high of $36,610.11 before paring gains to $34,154.29 as of 10:50 a.m. ET.
The cryptocurrency has risen more than 13% in a week, 92% in a month, and about 340% in a year, after central banks flooded
The remarkable rise in cryptocurrencies has attracted attention from all corners of the markets. On Monday, Cuban said on Twitter that the "cryptos trade" was "EXACTLY like the internet stock bubble" of the late 1990s, which burst with disastrous consequences for many companies and investors.
But he said Bitcoin, Ethereum, and "a few others" could survive and thrive as companies like Amazon and eBay did two decades ago.
Ethereum was up on Tuesday morning to $1,111. It was trading close to its all-time high of more than $1,200, set in early 2018. It has risen by about 675% in the past year.
—Mark Cuban (@mcuban) January 11, 2021
In another tweet, Cuban warned against trusting crypto evangelists who "try to justify whatever the pricing of the day is."
"All the narratives about debasement, fiat, etc are just sales pitches. The biggest sales pitch is scarcity vs demand. That's it," he said.
But Bitcoin enthusiasts say this time is different, arguing that a price crash like the one in 2018 - when it hit a record of about $19,900 but plummeted to about $5,870 in eight weeks - is unlikely.
Michael Hall, a cofounder of Nickel Digital Asset Management, said Bitcoin "is experiencing upside volatility which may correct sharply but tends to resolve reasonably quickly at higher levels as price discovery continues."
"We do not believe there has been any fundamental change in the outlook for Bitcoin which is now increasingly owned by longer-term investors, weighted towards Europe and North America, looking to buy and hold within multi-asset portfolios," Hall said.
UBS analysts took a dimmer view. "Given their high volatility and the size of their past drawdowns, cryptocurrencies might be attractive to speculative investors, but they are neither a suitable alternative to safe-haven assets, nor do they necessarily contribute to portfolio diversification," they said in a note.
The UK's Financial Conduct Authority said on Monday that "if consumers invest in these types of product, they should be prepared to lose all their money."
"Significant price volatility in cryptoassets, combined with the inherent difficulties of valuing cryptoassets reliably, places consumers at a high risk of losses," it added.