Bitcoin Recoups Losses as Mightily as it Loses Them

Bitcoin has again lived up to its volatility reputation. The crypto roared back mightily on Tuesday after petrifying traders Friday with its 22% plunge in value.

On Tuesday, Bitcoin rose just above $16,000. Interestingly, this price is within a few thousand dollars of where it was about a week ago when it was closing in on its all-time high of $20,000. On Dec. 17, Bitcoin hit $19,783 before retreating.

And retreat it did, falling to $10,400 on Friday. Since, it has rallied considerably, leading to it regaining 50% of its value since hitting that low.

Other currencies have also regained their losses. This includes Ethereum and Litecoin, which were up Tuesday 2.5% and 5.6%, respectively, according to Bloomberg.

Trying to make sense of it all

Bitcoin’s hard fall last week reinforced for many, and put just as many on notice, about the volatility of the crypto. Some observers say the fall was needed, and others warned of more sudden drops if the price continues to increase at rapid paces.

“…the market finds itself at an important juncture -- perhaps even a defining one. Either this sharp price correction will act as a catalyst for expanding what, until now, has been quite limited institutional involvement in this market -- or it will become a stage in the deflation of a remarkable and historic asset bubble.”

Fundstrat Global Advisors’ Tom Lee said Bitcoin’s price plunge was just what the crypto needed after its meteoric price rise over the last six weeks. On the day of the plummet, he said:

"We are buyers of bitcoin on this pullback. The intrinsic/fundamental value of bitcoin has risen in the past month given the surge of new wallets and hence, explains the rise in our short-term target price."

Based on higher user volume, Lee moved higher his mid-2018 target for the crypto to $20,000 from $11,500. The last time Lee raised his mid-2018 price target for Bitcoin was in November when he raised it to $11,500.