Bitcoin drops after climbing to all-time high

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imageForex11 hours ago (Feb 22, 2021 21:30)

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© Reuters. FILE PHOTO: Representation of the virtual currency Bitcoin is seen on a motherboard in this picture illustration

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By Tom Wilson and Gertrude Chavez-Dreyfuss

NEW YORK/LONDON (Reuters) – Bitcoin fell on Monday 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 rise in the price of the virtual currency.

The most popular cryptocurrency fell to $47,400, a one-week low. At one point, it lost nearly 17% of its value, or about $160 billion of its total market capitalization.

Bitcoin recouped some of the losses later in the trading session and was last down around 5.5% at $54,322, on track for its worst day since Jan 27. Its market cap was just under $1 trillion on Monday.

“Fairly standard after a rise this large to see a pullback. The usual dislocation of markets was seen,” said Charles Hayter, chief executive officer of crypto data provider CryptoCompare in London.

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

Bitcoin, which rallied on Sunday to a peak of $58,354, was still up more than 80% this year. Since hitting a low in March below $4,000, bitcoin has surged nearly 1,200%.

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

U.S. Treasury Secretary Janet Yellen also tamped down the flames 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.

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 about 8.2% at $1,774.

Trading platform IG said on Monday it had reached its limit for the amount of cryptocurrency it holds as a business and that it was no longer accepting new cryptocurrency buy orders from clients.

Bitcoin’s meteoric rise has been fuelled by signs that it is gaining acceptance among mainstream investors and companies, from Tesla and Mastercard (NYSE:MA) 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.

BNY Mellon is working with Fireblocks in conjunction with a new unit it announced earlier this month to help clients hold, transfer and issue digital assets, according to a report on Monday by CoinDesk.

Bitcoin drops after climbing to all-time high

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