Cryptocurrencies fell on Tuesday, Bitcoin briefly fell below $60,000, and Ether hit its lowest level this month, falling back from its recent record high.
The largest digital token caused a shock to traders, dropping by as much as 8.2%, and then halving the decline. The drop to $58,661 was the biggest intraday drop since September 24. Ether, the second-ranked currency, fell more than 10%, and subsequently regained lost ground. According to the tracker CoinGecko, the global market value of cryptocurrencies has fallen by about 10% in the past 24 hours to US$2.7 trillion.
XTB Market analyst Walid Koudmani said: “After a few days of rising, Bitcoin is hovering near historical highs. Because many other altcoins have successfully reached new highs, we have seen a sharp correction.” “If there are more negative news and prices Pushing to new lows, the extreme volatility that the market is prone to may lead to a potential domino effect.”
Cryptocurrency-centric stocks were also hit, and the share price of cryptocurrency exchange Coinbase Global Inc. fell about 4% at one point. MicroStrategy Inc., Marathon Digital Holdings Inc. and Riot Blockchain Inc. also all fell.
Technical indicators suggest that in the notoriously volatile market, the recent strong trend should be suspended.
Some analysts also attributed the decline to new tax reporting requirements for digital currencies, which are part of the $550 billion infrastructure bill, which President Joe Biden signed on Monday.
“We have seen the signing of the US Infrastructure Act, which has triggered a sell-off of traders who are concerned about regulation and taxation,” said Hayden Hughes, chief executive of Alpha Impact, a social trading platform.
The law introduced new reporting requirements for cryptocurrency “brokers” (such as Coinbase), which regularly provide services to perform digital asset transfers. Under the new requirements, these companies must now provide IRS with information about their customers, including: name, address, and phone number; total sales revenue; and any capital gains or losses.
Hughes also mentioned concerns about China’s continued regulatory crackdown. National Development and Reform Commission spokesperson Meng Wei said at a press conference that the state will study a plan to impose punitive electricity prices on companies involved in cryptocurrency mining.
Fiona Cincotta, a senior financial market analyst at City Index, said: “Bitcoin always becomes so unstable – the more people try to regulate and control it.” “It just eliminates its tie advantage.”
At the same time, the chief financial officer of Twitter Inc. said in an interview with Dow Jones on Monday that it makes no sense to invest the company’s cash in crypto assets such as Bitcoin. Twitter co-founder and CEO Jack Dorsey (Jack Dorsey) is one of the most high-profile cryptocurrency advocates.
Bitcoin has more than doubled this year, while Ethereum has risen about six times. As speculative demand and controversial arguments (they can hedge against inflation risks) fueled the enthusiasm for digital assets, both figures set records last week.
Noelle Acheson, head of market insights at Genesis Global Trading, said: “This seems to be just a correction to the bullish sentiment that is building in the market-volatility has been declining, and the BTC option skew has entered a negative zone.”
Many chart experts are looking for technical signals to understand the next move of Bitcoin. Its decline brought it to the 50-day moving average, which is a support level.
Miller Tabak + Co.’s chief market strategist Matt Maley wrote in a report that if Bitcoin is well below its low of around $59,000 at the end of October, it will mark a so-called Low, which will make it easy to fall further. notes. But a break below $50,000 before the end of this month will bring it below the trend line of the July low. He said that this means that further short-term declines will not cause any technical damage.
“Bitcoin has been hit hard,” Marley said. “After the strong performance of the past six weeks, I look like this is just some profit taking.”
As of 10:11 am New York time, Bitcoin had fallen 4.6% to $60,934.