Bitcoin extended losses, adding to its December decline and breaching key technical levels.
The token fell approximately 7.2 per cent overnight to trade at $US47,321, which is below its 200-day moving average. Ether, the second-largest coin, and the Bloomberg Galaxy Crypto Index were also in the red, with each falling roughly 7 per cent. Smaller tokens such as Solana, Cardano, Polkadot and meme token Dogecoin also lost ground, according to tracker CoinGecko.
The plunge likely accelerated as more than 165,000 traders had their accounts liquidated over the past 24 hours, equal to around $US524 million worth of digital assets, according to data from Coinglass, a crypto trading platform.
Investors have retreated from some of the most speculative corners of global markets of late, worried that an ebbing tide of central bank stimulus could spell trouble. Just how exposed Bitcoin and the wider digital-asset universe are to that risk is the subject of heated debate. Meanwhile, with the US Federal Reserve seen ready to take action as needed to stem rising prices, Bitcoin’s appeal among those who see it as a potential inflation hedge may be dimmed.
Matt Maley, chief market strategist for Miller Tabak + Co., said it’s strange to see cryptocurrencies selling off into year-end because many have been big winners in 2021 despite recent bouts of turbulence. But institutional investors might be behind this week’s declines, he said.
If these investors got to the party late, “their gains in cryptos are not as large — in fact, some of them probably have losses,” Maley said. “Therefore, they might be paring back their holdings a bit and adding to their exposure” elsewhere, such as equities.
Bitcoin has largely moved in tandem with riskier assets like US stocks this year, though that pattern looks to be breaking down this month. The S&P 500 index of the largest companies is up about 5 per cent so far in December, while Bitcoin has lost some 16 per cent for its worst monthly performance since May. This is the first month since June that their performances have diverged.
“Each new round of volatility seems to support an idea that the asset class is highly speculative,” said Mike Bailey, director of research at FBB Capital Partners.
(Except for the headline, this story has not been edited by The Finance World staff and is published from a syndicated feed.)