Bitcoin plunges to a 10-day low, dragging smaller cryptocurrencies down

LONDON (Reuters) – Bitcoin plunged Thursday to its 10-day low, leading to a sell-off that spread to other smaller digital currencies.

FILE PHOTO: A representation of the virtual currency Bitcoin is seen in this illustration taken on November 19, 2020. REUTERS / Dado Ruvic / Illustration

Bitcoin, the largest cryptocurrency in the world, plunged 13% to $ 16,317, a sharp correction from its three-year high of $ 19,521 reached the day before. The latest drop was 8%.

The cryptocurrency has risen about 150% this year to just short of its all-time high of $ 19,666. Fueling its rise was demand for riskier assets, interest in assets perceived as inflation resistant, and expectations that cryptocurrencies will have mainstream acceptance.

Bitcoin’s 12-year history has been studded with soaring gains and equally steep declines. It is highly volatile and its markets are far less transparent than traditional assets.

Traders cited the dissolving of highly indebted positions accumulated as bitcoin neared its record, as well as tweets from the CEO of the major cryptocurrency exchange Coinbase expressing concern over rumors of a regulatory crackdown.

“There has certainly been a sense of euphoria in the markets over the past couple of days … this seems mostly a reaction to that: over-indebted markets have taken a small hit and suffered immensely,” Joseph Edwards said of Enigma Securities, a cryptocurrency brokerage.

Brian Armstrong, CEO of California-based Coinbase, tweeted Here Tuesday that he was concerned about rumors that the US would crack down on individual cryptocurrency wallets.

“Brian Armstrong @ Coinbase tweeted his concerns which I think have spread these concerns to a wider audience,” said Jamie Farquhar, portfolio manager at crypto firm NKB Group.

Smaller cryptocurrencies also fell, with the second largest digital currency ethereum down about 13% and XRP, the third largest, down more than 20%. Both coins, which tend to move in tandem with bitcoin, hit multi-year highs earlier this week.

Reporting by Tom Wilson; Additional reporting by Alun John in Hong Kong and the Tokyo Markets team; Editing by Simon Cameron-Moore and Mark Potter


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