Bitcoin drops 17% to $ 45,000 as doubts grow over valuations

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LONDON / SINGAPORE :
Bitcoin fell 17% on Tuesday, causing the cryptocurrency markets to sell off as investors became nervous about extremely high valuations and leveraged players took profits.

The world‘s largest cryptocurrency suffered its biggest daily drop in a month, falling to $ 45,000. Bitcoin was last down 11.3% at 9:39 a.m. GMT.

The drop extended an almost one-fifth drop from Sunday’s record high of $ 58,354 – although bitcoin remains up around 60% for the year.

“The types of rallies we’ve seen are not sustainable and just invite withdrawals like this,” said Craig Erlam, senior market analyst at OANDA.

Ether, the world‘s second largest cryptocurrency by market cap, which often moves in tandem with bitcoin, also fell more than 17% and last bought $ 1,461, down almost 30%. % from last week’s record high.

The cryptocurrency markets have been very hot this year as big fund managers and companies start to take the emerging asset class seriously, accumulate money in the sector and build trust among investors. small-scale speculators.

A $ 1.5 billion investment in cryptocurrency by electric car maker Tesla this month helped raise bitcoin above $ 50,000, but can now put price pressure on the market. company action because it has become sensitive to bitcoin movements.

The rise in government bond yields over the past few days has hit riskier assets, spilling over into leveraged Bitcoin markets, said Richard Galvin of crypto fund Digital Asset Capital Management.

“The markets have been quite affected from a leverage point of view, so that didn’t help,” he added.

U.S. Treasury Secretary Janet Yellen, who stressed the need for more tightly regulated cryptocurrencies, also said on Monday that bitcoin was extremely inefficient at transacting and was a highly speculative asset.

Critics say the high volatility of the cryptocurrency is one of the reasons it has so far failed to gain popularity as a payment method.

Analysts said key price levels played a big role in determining the direction of the crypto markets.

“Because we are so lacking in fundamentals, it’s the big numbers that have proven to be points of support and resistance,” said Michael McCarthy, chief strategist at CMC Markets brokerage in Sydney.

“$ 50,000, $ 40,000, and $ 30,000 are the main levels on the chart at the moment. If we see it rise to $ 50,000, sales may pick up.”

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