Sudden Crypto Drop Sends Bitcoin To 3 Week Low

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Cryp­tocur­ren­cies fell sharply on Fri­day, with sud­den sell­ing drag­ging bit­coin to a three-week low, with ana­lysts divid­ed over the rea­son behind the decline.

Bit­coin fell as much as 7.7 per cent to USD 21,404 over a few min­utes dur­ing the Euro­pean morn­ing, at around 0640 GMT. It recov­ered slight­ly to trade around USD 21,528 at 1651 GMT, down 8.05 per cent on the day.

Ether was last down 8.32 per cent at USD 1,721.

Mar­cus Sotiri­ou, ana­lyst at dig­i­tal asset bro­ker Glob­al­Block, in a research note said there did not appear to be a sin­gle cat­a­lyst that led to the heavy selling.

“But the S&P 500 reject­ing and fail­ing to con­tin­ue its recov­ery con­tributed to bitcoin’s drop,” he said. The S&P 500 was down around 1 per cent by ear­ly Fri­day afternoon.

Mean­while, Susan­nah Streeter, senior invest­ment and mar­kets ana­lyst at Har­g­reaves Lans­down, sug­gest­ed the move was a “result of a large sale transaction.”

“It’s not show­ing the pat­tern of a flash crash, as the assets didn’t imme­di­ate­ly rebound sharply but sank even low­er in the hours that fol­lowed,” she said.

Streeter said it appeared the cryp­tocur­ren­cy car­dano had been the first to move, fol­lowed by bit­coin and ether, and then oth­ers such as the alt­coin dogecoin.

Cryp­tocur­ren­cies have fall­en dra­mat­i­cal­ly so far this year, as Fed­er­al Reserve rate hikes and ultra-high infla­tion prompt investors to ditch riski­er assets

Craig Erlam, senior mar­ket ana­lyst at Oan­da, said bit­coin’s fail­ure to recov­er its loss­es “sug­gests there is sub­stance to the move”.

Such sharp moves are com­mon in the high­ly volatile cryp­tocur­ren­cy mar­ket. On June 15, bit­coin plunged more than 15 per cent as investors were spooked by the col­lapse of a so-called sta­ble­coin, Ter­raUSD, and a major cryp­to lender freez­ing cus­tomer withdrawals. 

Fri­day’s move put bit­coin on track for its worst day since the June meltdown.

“Spec­u­lat­ing in cryp­tocur­ren­cies is extreme­ly high risk and is not suit­able for the vast major­i­ty of peo­ple,” Har­g­reaves Lans­down’s Streeter said.

(Reuters)




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