Two-Day Bitcoin Plunge Shakes Faith in Cryptocurrency Boom

An armed guard patrols in front of illuminated mining rigs mounted inside racks at the BitRiver Rus LLC cryptocurrency mining farm in Bratsk, Russia, on Friday, Nov. 8, 2019. Bitriver, the largest data center in the former Soviet Union, was opened just a year ago, but has already won clients from all over the world, including the U.S., Japan and China. Most of them mine bitcoins. Photographer: Andrey Rudakov/Bloomberg

(Bloomberg) -- The white-knuckle Bitcoin ride took another twist Monday as a two-day tumble in the digital currency stoked concern that the polarizing cryptocurrency boom may run out of steam.

Bitcoin, the largest cryptocurrency, slid as much as 18% over Sunday and Monday to as low as about $33,500. That’s the biggest two-day slide since May last year and follows a record high of almost $42,000 on Jan. 8.

“It’s to be determined whether this is the start of a larger correction, but we have now seen this parabola break so it might just be,” said Vijay Ayyar, head of business development with crypto exchange Luno in Singapore.

Cryptocurrencies are becoming emblematic both of the exuberance in financial markets as well as of the concern that the pace of gains is unsustainable. Believers in Bitcoin see it as a maturing asset that provides a hedge against dollar weakness and inflation risk. Others worry that the rally is untethered from reason and fueled by vast swathes of fiscal and monetary stimulus.

Bitcoin has shrugged off recent dips and may do so again, potentially recovering to as much as $44,000 “before the actual correction,” Ayyar said.

It pared losses and as of 1:22 p.m. in Tokyo was around $35,200. Rival digital assets are also slumping, with second-largest coin Ether tumbling as much as 20% Monday.

(Updates with analyst comment in the third paragraph.)