Breaking News
0
Ad-Free Version. Subscribe now to follow markets, faster and distraction-free. More details

Bitcoin plummets as doubts grow over sky-high valuation

Stock MarketsFeb 23, 2021 07:12
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
2/2 © Reuters. FILE PHOTO: A representation of virtual currency Bitcoin is seen in front of a stock graph in this illustration taken 2/2

By Tom Wilson and Tom Westbrook

LONDON/SINGAPORE (Reuters) - Bitcoin plummeted as much as 17% on Tuesday as investors grew nervous at sky-high valuations, triggering the liquidation of leveraged bets and sparking a sell-off across cryptocurrency markets.

The world's biggest cryptocurrency was facing its biggest daily drop in a month, falling to as low as $45,000. In choppy trading, it was last down 15.6%.

The drop took its losses to over a fifth from a record high of $58,354 hit on Sunday and underscored the volatility of the emerging asset - though it is still up around 60% this year.

"The kinds of rallies we've been seeing aren't sustainable and just invite pullbacks like this," said Craig Erlam, senior market analyst at OANDA. "It was an extremely overbought market."

Ether, the world's second largest cryptocurrency by market capitalisation that often moves in tandem with bitcoin, also dropped more than 20% to $1,410, down over 30% from last week's record peak.

Cryptocurrency markets have been running hot this year as big money managers and companies begin to take the emerging asset class seriously, piling money into the sector and driving confidence among small-time speculators.

A $1.5 billion investment by electric carmaker Tesla this month has helped vault bitcoin above $50,000 but may now lead to pressure on the company's stock price as it has become sensitive to movements in bitcoin.

LEVERAGED LOSSES

Rising government bond yields over recent days have hit riskier assets in traditional markets, with the caution spilling over into highly leveraged bitcoin markets, said Richard Galvin of crypto fund Digital Asset Capital Management.

Exchanges popular with cryptocurrency investors in Asia, including Binance and Huobi, accounted for about 70% of liquidations of leveraged bets over the last 24 hours, according to crypto data site Bybt.

Bitcoin's losses were "compounded by the amount of liquidation that has happened in the last 24 hours", said Lan Gu of Alameda Research, a crypto trading firm.

The cryptocurrency's rapid gains in recent months have led to calls from governments and financial regulators for tighter regulation.

U.S. Treasury Secretary Janet Yellen said on Monday that bitcoin was extremely inefficient at conducting transactions and was a highly speculative asset.

Bitcoin's high volatility, critics say, is among reasons that it has so far failed to gain widespread traction as a means of payment - an expectation that has in part fuelled its rally.

Analysts said that, with few fundamental factors by which to judge bitcoin's value, key price levels would play a large part in determining the direction of crypto markets.

"It's the big figures that have proved to be support and resistance points," said Michael McCarthy, chief strategist at brokerage CMC Markets in Sydney. "$50,000, $40,000 and $30,000 are the key chart levels at the moment."

Bitcoin plummets as doubts grow over sky-high valuation
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (2)
Raina Mohak
Raina Mohak Feb 23, 2021 7:41
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Sold yesterday
Jack Zydron
Jack Zydron Feb 22, 2021 23:09
Saved. See Saved Items.
This comment has already been saved in your Saved Items
sell, sell, sell!!!
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email