Bitcoin falls further after weekend rout wipes more than $400 billion from crypto markets | Currency News | Financial and Business News
- Bitcoin fell again Monday after a weekend crypto sell-off wiped more than $400 billion from the digital asset market.
- The world’s biggest cryptocurrency traded below $50,000 Monday, having stood above $57,000 four days earlier.
- Analysts said cryptocurrencies are likely to stay volatile as policymakers navigate the next phase of the pandemic.
Bitcoin fell Monday after a dramatic rout wiped more than $400 billion from crypto markets over the weekend.
The world’s biggest cryptocurrency was down 3.7% to $47,585 on the Coinbase exchange as of 5.35 a.m. ET.
Bitcoin crashed to as low as $42,000 Saturday from above $57,000 Friday, before rebounding to trade just below $50,000 for most of Sunday.
As of Monday, the token was roughly 30% below its November record high of close to $69,000, underscoring the volatility of the digital asset.
Ether, the second-biggest token, was down 6.4% at $3,951 Monday on Coinbase. It too crashed Saturday, falling as low as $3,570 before rebounding somewhat.
The weekend plunge wiped more than $400 billion from the global cryptocurrency space, with the total market value of all tokens falling from above $2.6 trillion to below $2.2 trillion Monday, according to Coinmarketcap.
Crypto markets started tumbling Friday along with other risky assets such as tech and meme stocks.
A combination of worries — including the new Omicron coronavirus variant, rising chances that the Federal Reserve will tighten monetary policy, and mixed signals from the US economy — have unnerved investors.
Analysts said the crypto crash was exacerbated by the structure of the markets, where traders often use derivatives — contracts that let people bet on the direction of an asset without actually owning it — and borrowed money.
As prices started falling Friday, many exchanges began “liquidating” traders’ positions to ensure they had enough money on hand to cover losses, adding to the downward pressure in the market.
On Friday, over $2 billion in long positions across the global crypto market were liquidated, nearly $850 million of which were from bitcoin futures, according to Sean Farrell, head of digital asset strategy at Fundstrat.
Read more: Famed investor Louis Navellier warns that there are mounting signs a coming ‘double top’ in bitcoin could wipe out more than a year’s gains for the cryptocurrency
Smaller tokens such as solana, binance coin and cardano were also lower Monday after slumping at the weekend.
Yet Farrell said that “there is reason to believe that bitcoin consolidates around its current level before heading higher,” given that traders are likely to be attracted by cheaper prices.
Despite the weekend crash, crypto prices remained sharply higher for the year. Bitcoin was last up around 62% year-to-date, while ether was more than 430% higher.
But analysts expect the ride to be bumpy for cryptocurrencies in the coming months, as economic policymakers navigate the next phase of the pandemic.
Susannah Streeter, senior markets analyst at broker Hargreaves Lansdown, said: “Crypto coins and tokens have been propelled higher in this era of ultra-cheap money.”
She added: “As speculation swirls about just when central banks will start further tightening mass bond-buying programmes and start raising interest rates, they are likely to continue to be highly volatile.”