Elon Musk's recently-sparked Bitcoin rally has almost evaporated

A jump in the price of Bitcoin sparked last week by Elon Musk’s Twitter profile had largely unwound by Monday.

The cryptocurrency surged as much as 16% Friday, touching $38,627, after Musk changed his Twitter profile to “#bitcoin.” While the reference was still visible Monday, Bitcoin was back at around $33,600 as of 2 p.m. in Tokyo.

Cryptocurrencies have been buffeted recently by volatile retail-investor demand shaped online in Twitter feeds and Reddit forums. Dogecoin -- a Shiba Inu-themed digital coin that started as a joke -- rallied into the top 10 cryptocurrencies by market value last week before plunging over the weekend.

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Bitcoin has shed about $8,000 since reaching an all-time high of almost $42,000 in early January but remains up more than 250% in the past year.

Some argue Bitcoin is winning a wider investor base because it’s muscling in on gold as a hedge for risks such as dollar weakness or faster inflation. Others see a precarious rally propelled largely by speculation atop a tide of stimulus.

The digital asset could be due for a “drawdown” because its price ascent is “steeper than any other financial innovation or asset bubble of the past 50 years,” John Normand, a strategist at JPMorgan Chase & Co., wrote in a note Friday. 

Read more: What Bitcoin teaches us about risky investing

Musk and his tweets are popular on the microblogging site, regularly ‘disrupting’ the markets with a few words or a change to his profile.  He recently caused an overload on secure messaging app Signal's servers, after tweeting “Use Signal” following WhatApp's latest privacy controversy.  

Bitcoin rose 3% to $33,560 as of 2 p.m. in Tokyo on Monday. The wider Bloomberg Galaxy Crypto Index, which includes Bitcoin and second-ranked Ether, dipped 2%. 

- With inputs from HT Correspondent