Bitcoin tanked Thursday as its price came within striking distance of an all-time high.
The price of bitcoin was trading at $17,185, down $794, or 4.42%, at 7:15 a.m. ET. The cryptocurrency hit an overnight low of $16,581.20.
Thursday’s selloff comes after the cryptocurrency during the prior session touched a high of nearly $19,391, just 0.54% below its all-time closing peak of 19,497.
“Volatility is really baked into the cake when it comes to bitcoin,” said Mati Greenspan, founder of Quantum Economics, a Tel Aviv-based project for helping people understand financial markets. “These type of sizable corrections have occurred quite frequently in all of her major bull runs. It’s the markets way of shaking out traders with weak hands and/or too much leverage.”
Bitcoin, the largest cryptocurrency by market capitalization at more than $321 billion, has had a strong 2020, gaining 160% through Wednesday.
The cryptocurrency’s price has benefitted, along with other risk assets, from monetary and fiscal stimulus that has been deployed all over the world to combat the economic damage caused by lockdowns aimed at slowing the spread of COVID-19.
“We remain bullish as ever and still feel that a fresh all time high is possible before Christmas,” Greenspan said.
The allure of bitcoin’s price surge has caught the attention of Hollywood stars and previously skeptical Wall Street investors.
Billionaire investor Stanley Druckenmiller earlier this month told CNBC that he bought bitcoin due to its potential as a “store of value.”
Also getting in on the bitcoin frenzy was “Game of Thrones” star Maisie Williams, who took to Twitter for her investing advice. She bought the cryptocurrency despite more poll respondents telling her not to do so.
While bitcoin seems to be gaining popularity with the masses, there are still plenty of skeptics, including Ray Dalio, founder of Bridgewater Associates, the world’s largest hedge fund with $98.9 billion in assets.
He recently argued the cryptocurrency’s volatility means it is not a store of value and that it has little correlation with the prices of goods, meaning owning it “doesn’t protect” buying power, among other things.