LONDON: Bitcoin collapsed on Tuesday (November 20) at its lowest this year, falling to 10% to breach US $ 4,300 and bringing losses into the world's most popular digital currency at 25% in a week.
Other smaller currencies also abruptly halted as a broader sell-off of cryptocurrencies, stating that traders and market makers took root in heavy sales in leveraged Asian power plants.
The fall followed a sudden collapse last week that rocked bitcoin from a period of relative stability, where prices had hovered around 6,500 US dollars for several months.
Bitcoin sank to $ 4,297, the minimum since October 2017. At mid-afternoon, it traded around US $ 4,750 on the Bitstamp exchange.
"We were waiting for a break-out," said Mati Greenspan, senior eToro market analyst. "When the price moves so constantly, you've accumulated a lot of stop loss orders and now you see them liquidated."
Ripple's XRP and Ethereum's ether, the second and third largest currency, fell by 14% and 16% respectively before recovering losses in US trading hours.
Tuesday's falls coincided with wider falls in the financial markets. European equities declined due to the bad results of the retail trade and the weakness of Apple Inc. dragged to Wall Street.
Bitcoin has plummeted more than 75 percent this year from a peak of $ 20,000 touched in December when retail investors huddled into one of the biggest bubbles in history.
Traders and market makers have experienced bitcoin slipping on heavy sales in Asia, such as the OKEx and Bitmex solutions. Few exchanges in the West give bitcoins to traders, making Asian places popular with speculators.
"The presence of leverage makes daily traders attracted to Asian markets," said Michael Moro, CEO of Genesis Global Trading in New York, one of the largest countertop trading desks.
"People who are risking a 100X leverage, it's really hard to think of it as an investment – it's a casino mentality."
Others have accused the fears that last week's "hard fork" in bitcoin cash, where a software update has split the fourth largest currency into two separate currencies, could destabilize others.
The price of bitcoin tends to be sensitive to debates on how its underlying network evolves. Last year the suspension of the fixed forks, planned by the main builders and investors, proved to be an important catalyst for its dizzying increase.
Traditional investors remained outside the bitcoin, with concerns over poor regulatory oversight and an undeveloped market infrastructure exacerbated by frequent price fluctuations.
This lack of involvement has seen the bitcoin struggle be at the height of its billing as something that will revolutionize world finance. Its use as a payment currency has been downsized this year.
At the same time, the fall in the value of bitcoins has calmed the fears of regulators and central banks that could one day pose a risk to financial stability.
According to the Coinmarketcap.com industry tracker, the total value of cryptocurrencies is now around US $ 154 billion, down from a peak of around $ 800 billion in January.
Supporters of cryptocurrency claim that bitcoin is still young and that price volatility can be expected. Many predict that virtual currencies operating outside the traditional banking system will outweigh any short-term price decline.
In the late afternoon XRP and ether traded around US $ 0.45 and US $ 142 respectively on the Bitstamp stock exchange based in Luxembourg.
"Euphoria has declined and prices have consolidated with lower lows and lower lows," said Fawad Razaqzada, an analyst at Forex.com. "A lot of people have lost interest".
(Reporting by Tom Wilson and Tommy Wilkes, Editing by Saikat Chatterjee and Ed Osmond)