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Deal
Bitcoin led a broad cryptocurrency selloff on Thursday, dropping 9.7 percent to $ 16,933 after hitting its highest level in nearly two years earlier this week.
FILE PHOTO: A representation of the virtual currency Bitcoin is seen in front of a stock chart in this illustration taken on November 19, 2020. REUTERS / Dado Ruvic / Illustration / File photo
LONDON: Bitcoin plunged to its lowest level in 10 days on Thursday, slowing its rapid recovery and causing a sell-off among smaller digital currencies.
Bitcoin, the world’s largest cryptocurrency, fell as much as 13% to its lowest level since Nov.16. It fell 9% to $ 17,074, a sharp correction from its three-year high of $ 19,521 reached on Wednesday.
It has recovered around 140% this year to just below its all-time high of $ 19,666, driven by demand for riskier assets, the perception that it is resistant to inflation, and expectations that cryptocurrencies will win the market. widespread acceptance.
The second-largest cryptocurrency, ethereum, fell about 13 percent and XRP, the third-largest, slipped above 20 percent. Both currencies, which tend to move in tandem with bitcoin, hit multi-year highs earlier this week.
Bitcoin’s 12-year history has been peppered with skyrocketing gains and equally sharp drops. Its volatility has hampered the use of payouts and has made many larger investors wary.
Sponsors expected that by 2020 a more mature market and fewer retail investors would have reduced the chances of the kind of crisis that followed its 2017 bubble.
Traders cited for the drop the dismantling of accumulated highly leveraged positions as Bitcoin approached its record high, as well as tweets from the CEO of Coinbase, the leading cryptocurrency exchange, expressing concern over rumors of a regulatory crackdown.
“There has definitely been a sense of euphoria in the markets for the last few days,” said Joseph Edwards of cryptocurrency brokerage Enigma Securities. “This mostly feels like a reaction to that – the over-leveraged markets took a little hit and suffered immensely.”
Since 2017, a functioning crypto derivatives market has developed, with exchanges abroad offering highly leveraged positions. In times of tight liquidity, movements in such markets can have a huge effect on the price of bitcoin.
Others cited concerns around speculation by market players about stricter US regulation on how individual investors store cryptocurrencies.
Brian Armstrong, CEO of California-based Coinbase, tweeted on Tuesday https://twitter.com/brian_armstrong/status/1331744884856741888 that he was concerned by rumors that the United States would clamp down on individual cryptocurrency wallets.
The US Department of the Treasury did not immediately respond to a request for comment sent outside of business hours.
Bitcoin has reacted sharply in the past to regulatory crackdowns by US authorities.
Last month, US prosecutors filed criminal charges accusing four founders and executives of crypto derivatives exchanges BitMEX of evading rules designed to stop money laundering.
(Reporting by Tom Wilson; Additional reporting by Alun John in Hong Kong and the Tokyo Markets team; Edited by Mark Potter and Pravin Char)
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