New Delhi: Bitcoin fell below $60,000 for first time since Nov. 1, while the cryptocurrency ether also dropped sharply. Bitcoin — which last week hit a new record high of $69,000 — fell to as low as $58,600, its weakest in 19 days, and was last down around 7% on the day. It is down 14% from that peak.
Meanwhile, Ether, the world`s second biggest cryptocurrency, fell to a 19-day low of $4,109.03 and was last down around 9.7% on the day.
If sustained, the move will be both cryptocurrencies’ biggest daily fall since September.
While profit-taking after the massive run-up in prices was emerging as the biggest factor, analysts pointed to bitcoin`s blockchain upgrade on the weekend, higher U.S. inflation and China`s latest directive to its state-owned firms not to engage in cryptocurrency mining as being other reasons behind the more cautious sentiment.
Bitcoin has doubled in value since January. Its correction could get severe if it fell through $58,000, Craig Erlam, senior market analyst at online broker Oanda, said in a note.
“This is roughly where it found strong support at the end of October and given how much it`s struggled to make major strides higher since, it could be the catalyst for a deeper correction,” Erlam wrote.
News that Twitter would not be investing in cryptocurrencies and the U.S. Securities and Exchange Commission`s (SEC) rejection of what would have been the first U.S. spot bitcoin exchange-traded fund by VanEck were also dampeners.
“This has the feel that we could see some messy two-way action, and it wouldn’t surprise to see 68,000 capping the upside, 57,000 the downside.” Chris Weston, head of research at brokerage Pepperstone in Melbourne, wrote in a client note.
In the past week, traders have become less willing to pay to hold long positions in bitcoin futures. Average funding rates fell to 0.00354% on Tuesday, according to cryptocurrency analytics platform CryptoQuant, their lowest since late September and down from 0.04122% on Nov. 10. Also Read: New surprise in McDonald’s Happy Meal! Food combo gets ITC beverages inside
Funding rates represent sentiment in the perpetual swaps market, a major part of the bitcoin derivatives world. Positive funding rates imply that traders are bullish, as they must pay to hold a long position, while negative rates mean traders must pay to hold a short position, and hence are bearish. Also Read: HDFC refuses to address grievance of customer whose account was debited in unauthorised manner