Bitcoin’s 2023 rally frays during brief 7.5% drop towards US$40,000
(Dec 11): Bitcoin delivered another bout of its notorious volatility in a sharp tumble towards US$40,000 (RM187,260) amid a broader crypto sell-off.
The largest token sank as much as 7.5% to US$40,521, before paring some of the losses to trade 3.6% lower at US$42,245 as of 7.15am on Monday in London.
Smaller tokens like Ether, XRP, Polkadot and Avalanche also fell. A gauge of the largest 100 digital assets shed about 4%, the largest drop since Nov 22.
Bitcoin has been on a tear this year on expectations that regulators will allow the first US spot bitcoin exchange-traded funds, widening the potential base of crypto investors. Bets that the Federal Reserve (Fed) will cut interest rates in 2024 have also encouraged the rally both in Bitcoin and virtual currencies as a whole.
“Market leverage had risen materially,” said Sydney-based Richard Galvin, a co-founder at Digital Asset Capital Management. “The current fall looks like a market deleveraging as opposed to any fundamental news catalyst.”
Coinglass data showed that about US$312 million worth of crypto trading positions betting on higher prices were liquidated on Monday as of 7.15am in London — the highest such tally since at least mid-September.
Investors are braced this week for US inflation data and the Fed’s final policy meeting of 2023, both of which could test aggressive wagers on rate cuts. Global stocks and US equity futures wavered on Monday as a dollar gauge ticked up, a sign of cautious sentiment.
“It makes sense to see some profit-taking,” said Tony Sycamore, a market analyst at IG Australia Pty Ltd. He expects falls towards the US$37,500 to US$40,000 range to be “well supported” by dip buyers.
Bitcoin has jumped more than 150% year-to-date, energising a wider recovery in digital-asset prices from a US$1.5 trillion rout in 2022. The token remains well below its pandemic-era record of nearly US$69,000 set just over two years ago.
