Bitcoin drops after weekend climb to all-time high

Bitcoin drops after weekend climb to all-time high

FILE PHOTO: Representation of the virtual currency Bitcoin is seen on a motherboard in this picture
FILE PHOTO: Representation of the virtual currency Bitcoin is seen on a motherboard in this picture illustration taken April 24, 2020. REUTERS/Dado Ruvic/Illustration

NEW YORK: Bitcoin fell on Monday (Feb 22) after surging to its latest record high a day earlier as a sell-off in global equities curbed risk appetite, with some investors also citing concerns about the rapid surge in the virtual currency's price.

Traders also pointed to the unwinding of highly leveraged long positions in the cryptocurrency.

The most popular cryptocurrency fell to US$47,400, a one-week low. At one point, it lost nearly 17 per cent of its value, or about US$160 billion wiped out from its total market capitalisation. Its market cap on Monday slid to US$983 billion, after hitting more than US$1 trillion on Friday.

Bitcoin was last down 7.4 per cent at US$53,385.

Bitcoin rallied on Sunday to a peak of US$58,354, with its latest bout of weekend price moves taking its gains so far this year to almost 100 per cent.

Tesla boss Elon Musk, whose tweets on bitcoin have added fuel to the cryptocurrency's rally, said on Saturday the price of bitcoin and ethereum seemed high.

Bitcoin was still up more than 80 per cent this year. Since hitting a low in March below US$4,000, bitcoin has surged nearly 1,200 per cent.

US Treasury Secretary Janet Yellen added fuel to the fire on Monday, saying bitcoin is extremely inefficient at conducting transactions and is a highly speculative asset.

"The selloff across the board this week is a result of some of last week's exuberance easing, as well as a much-needed unwinding of over-leveraged long positions," said Ross Middleton, co-founder of cryptocurrency exchange DeversiFi.

Rival cryptocurrency ethereum, which tends to move in tandem with bitcoin, also tumbled after hitting a record high on Saturday. It hit a three-week low on Monday and was last down 10 per cent at US$1,743.

Bitcoin's meteoric rise to over US$50,000 has been fuelled by signs that it is gaining acceptance among mainstream investors and companies, from Tesla and Mastercard Inc to BNY Mellon.

"We do tend to think that there's a good chance of a down week and small correction coming in off of this, although it does little to dull medium-term prospects," said Joseph Edwards of Enigma Securities, a cryptocurrency brokerage in London.

Source: Reuters/jt

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