Sudden crypto drop sends bitcoin to three-week low
The cryptocurrency fell sharply on Friday, with a sudden sell-off taking bitcoin to a three-week low, with analysts divided on the reason for the drop.
Bitcoin fell 7.7 percent to $21,404 in a matter of minutes during the European morning. It recovered slightly and traded near $21,528, down 8.05 percent on the day.
Ether was last down 8.32 percent at $1,721.
Marcus Sotirio, analyst at digital asset broker GlobalBlock, said in a research note that there doesn’t seem to be a single catalyst that has led to the huge selloff.
“But the S&P 500 getting rejected and failing to continue its recovery contributed to bitcoin’s decline,” he said. The S&P 500 was down nearly 1 percent as of Friday afternoon.
Meanwhile, Susanna Streeter, senior investment and markets analyst at Hargreaves Lansdowne, suggested the move was “the result of a large sale transaction.”
“It is not showing a flash crash pattern, as the asset did not rally bullish immediately, but declined further in the hours thereafter,” she said.
Streeter said it appears that the cryptocurrency Cardano moved first, followed by bitcoin and ether, and then others such as altcoins Dogecoin.
Cryptocurrencies have fallen dramatically so far this year, as Federal Reserve rate hikes and ultra-high inflation prompted investors to abandon riskier assets.
Oanda’s senior market analyst Craig Erlam said that bitcoin’s failure to recover its losses “suggests substance to the move”.
Such sharp moves are common in the highly volatile cryptocurrency market. On 15 June, bitcoin fell over 15% as investors panicked over the collapse of the so-called stablecoin, TeraUSD, and a major crypto lender freezing customer withdrawals.
Friday’s move put bitcoin on track for its worst day since the June recession.
“Speculating in cryptocurrencies is extremely high risk and not suitable for most people,” said Streeter of Hargreaves Lansdowne.