Bitcoin, the largest cryptocurrency by market cap, was trading at around $45,949.50, down 1.8% from Tuesday’s 5 p.m. ET level, according to CoinDesk. It lost 17% in a matter of minutes on Tuesday and ended the day around 10%. Other digital assets have also lost ground: Ether, the second largest, dropped 2.6% on Wednesday.
There has not been a single catalyst to accelerate the recent sell-off. Analysts say a 70% increase in the value of bitcoin since the end of July—along with the excitement associated with El Salvador’s adoption of bitcoin as the national currency starting Tuesday—spurred traders to book profits. can go. Investors have also been betting on other cryptocurrencies in recent months, giving a boost to the Ethereum and Cardano blockchains and raising prices on the non-fungible token.
Bitcoin and rival digital assets are also notorious, with prices often jumping wildly on rumours, tweets from influencers or shifts in sentiment among groups of traders banding together on social media to speculate.
In the latest round of volatility, bitcoin has lost nearly $93 billion in market cap since Sunday. Other cryptocurrencies also took a hit: Ether lost $61 billion, and Cardano’s ADA lost $13 billion.
“Profit taking was very much on the cards,” said Naeem Aslam, London-based chief market analyst at brokerage AvaTrade. “In our view, this is a very healthy pullback.”
Several factors could dampen the optimism and prevent another rally in Bitcoin. Coinbase Global Inc said on Wednesday that the Securities and Exchange Commission had threatened to sue the cryptocurrency exchange if it launches a program that lets users earn interest by lending crypto assets. Coinbase shares fell 3.3% in premarket trading.
Disturbances in the rollout of El Salvador’s unprecedented adoption of bitcoin as the national currency may also dampen expectations among some traders. The President of the Central American country, Nayib Bukele, said early Wednesday that the government’s bitcoin e-wallet would be taken offline between 1 a.m. and 6 a.m. local time in order to improve and address problems reported by users.
Analysts say the friction between worldwide adoption of cryptocurrencies on the one hand and regulators paying more attention to the market on the other could lead to greater volatility in the digital asset.
This story has been published without modification to the text from a wire agency feed
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