The cryptocurrency market has fallen into a sharp slide, losing more than US$200 billion ($278 billion) in value in the past 24 hours.

Bitcoin was down around 13 per cent today, falling from $55,000 on January 10 to $44,000 today.

Bitcoin has had a strong start to 2021, growing strongly amid the continued global uncertainty due to the pandemic.

This has led some analysts to question whether the cryptocurrency could eventually emerge as the competitor to gold.

Earlier this month, JP Morgan predicted that bitcoin could rise to US$146,000 in value over the longer term as it competes with gold to become an alternative currency.

"Bitcoin's competition with gold has already started in our mind," analysts from JPMorgan commented on Tuesday.

"Considering how big the financial investment into gold is, a crowding out of gold as an 'alternative' currency implies big upside for Bitcoin over the long term."

Cryptocurrency investor Tyler Winklevoss went even further suggesting US$500,000 as a "conservative target" for bitcoin.

However, not everyone is convinced yet.

Financial Times columnist Merryn Somerset Webb noted this week that bitcoin still faces a number of hurdles in its quest to change the way we think about currency.

"It needs more active investors, it needs a much deeper and more liquid market [only a tiny part of the bitcoin market is ever traded — hence its volatility] and it needs wider acceptance," Somerset Webb said.

"All these things may happen. And I'll be buying a little more as a hedge against that — not so much as to ruin me if it goes to zero, enough so that I don't feel too awful at US$500,000."

Somerset Webb went on to note that the euphoric price rises of the past few weeks still scream of mania and that investors should remain cautious.

She's not the only one to hold this view.

Britain's Financial Conduct Authority warned this week that consumers who invest in these kinds of products should be prepared to "lose all their money".

"Significant price volatility in cryptoassets, combined with the inherent difficulties of valuing cryptoassets reliably, places consumers at a high risk of losses," the financial watchdog said.

The question now is what next for the highly volatile currency.