(Bloomberg) — Bitcoin turned lower in Asia, dipping below the closely watched $50,000 level Thursday amid a wider mood of caution in financial markets.
The largest cryptocurrency fell as much as 3.8% and was holding at about $49,500 as of 2:38 p.m. in Hong Kong. The coin surged Wednesday to briefly trade above $52,000, about $6,000 shy of last month’s record.
“After the massive drop from $58,000, this could be traders selling the bounce,” said Vijay Ayyar, head of Asia Pacific with cryptocurrency exchange Luno in Singapore.
Bitcoin’s most ardent fans argue it’s consolidating before a run at a fresh record because the token is emerging as a hedge for inflation risk just as fears about price pressures escalate. Critics say Bitcoin is in a giant, stimulus-fueled bubble that’s destined to burst like the 2017 boom and bust cycle.
It seems that “cryptos are eating gold’s inflationary-hedge lunch,” Jeffrey Halley, senior market analyst at Oanda Asia Pacific Pte, wrote in an email.
Bitcoin slid 21% last week but is still up more than fivefold in the past year. On a technical basis, the GTI Global Strength Indicator, which detects trend fluctuations, has begun to curl upward, suggesting a bullish move for Bitcoin.
Meanwhile, more big-name investors are backing crypto. Bloomberg reported late Tuesday that billionaire hedge-fund manager Marc Lasry and former U.S. Commodity Futures Trading Commission Chairman Christopher Giancarlo have invested in crypto-asset and blockchain investment firm BlockTower Capital.
In Canada, new Bitcoin vehicles helped to woo a near-record $5.2 billion to the nation’s exchange-traded funds in February.
The crypto sector is gaining more attention from regulators as it steps closer to the mainstream following Tesla Inc.’s $1.5 billion Bitcoin purchase and signs of growing institutional investor interest.
On Tuesday, Gary Gensler, nominee for chairman of the U.S. Securities and Exchange Commission, said that making sure crypto markets are free of fraud and manipulation is a challenge for the agency.