Bitcoin Extends Tumble in Further Blow to Volatile Crypto Boom

Lights illuminate as application-specific integrated circuit (ASIC) devices and power units operate inside a rack 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) -- Bitcoin resumed declines Wednesday as the digital coin heads for its worst week since March last year, casting doubt on the outlook for the cryptocurrency boom.

Bitcoin fell as much as 6.8% to about $32,359 before paring some losses, according to a composite of prices compiled by Bloomberg. The largest cryptocurrency hit a record of almost $42,000 on Jan. 8 before tumbling to a low around $30,300. The Bloomberg Galaxy Crypto Index fell as much as 7.1%.

The price swings evoke memories of Bitcoin’s December 2017 bubble that was followed by a rapid collapse. They also test recent narratives, such as the argument that Bitcoin is maturing into a hedge against dollar weakness and inflation risk, and attracting longer term investors.

An alternative view is that fast money seeking rapid gains helped to propel the quadrupling in Bitcoin over the past year, leaving the rally exposed to the risk of such investors pulling out as momentum wanes.

“Taking some profits off the table after an asset -- any asset, not only Bitcoin -- doubles in value within three weeks is completely understandable,” said Julius de Kempenaer, senior technical analyst at StockCharts.

Bitcoin could reach $146,000 long term as it competes with gold as an asset class if swings in the digital asset moderate sufficiently to lure more institutional investors, JPMorgan Chase & Co. strategists said this month. They also flagged signs of froth that could lead to a pullback in the shorter term.