Bitcoin slides 10 per cent, erasing $125 billion in value

Bitcoin has fallen more than 10pc this morning after a record-breaking weekend where its value broke US$34,000 (NZ$47,000) for the first time.

The Monday morning slump in Bitcoin's valuation has wiped around US$90bn (NZ$125 billion) from the cryptocurrency's all-time high market cap on Sunday. Bitcoin now stands at around US$30,802, which is still considerably up from its US$28,900 open to the year.

Bitcoin is a cryptocurrency, a digital coin that is traded and recorded using blockchain technology, a digital ledger of all past transactions.

Alternatives to Bitcoin have surged off the back of the cryptocurrency's record-breaking weekend. Crypto advocates have touted their merits as a hedge against the US dollar. Some have claimed that they offer a safer bet than gold while others point out that Bitcoin's 300pc rise over the past year has helped fuel a bubble.

Ethereum, another digital currency, jumped to a high of $1,142 this morning, up from $741 on New Year's Day, according to figures from Coindesk. Similarly Litecoin, another Bitcoin rival, recorded a 25pc rise to £108 since the turn of the year.

Vijay Ayyar, head of business development with Singapore-based crypto exchange Luno, told Bloomberg that the movement in the alternative currencies had been driven by Bitcoin's weekend surge.

"This rotation happens usually when Bitcoin has a large rally and investors rotate profits," he said.

Bitcoin's wild ride has continued. Photo / Getty Images

Bitcoin's last price surge was in 2017, when a surge of speculation pushed the digital coin's price to just under $20,000.

That record was broken on December 16 and since then, the digital coin has added more than $10,000 to its price. In 2020, Bitcoin's price increased by 280pc amid global uncertainty and stock market swings.

David Madden, market analyst at CMC Markets, said the cryptocurrency had been on a "very bullish streak recently".

"Some view it as an alternative investment, especially in an environment where central banks are deliberately trying to weaken their currencies in a bid to deal with the fall-out from the pandemic," he said.

"Bitcoin is also gaining more traction as a form of payment and its acceptance by PayPal has helped its recent rally too."