Bitcoin shed a fifth of its value this morning as a combination of profit-taking and macro-economic concerns triggered nearly a billion dollars worth of selling across cryptocurrencies.
Bitcoin was 12 per cent down at this morning at $47,495. It fell as low as $41,967.5 during the session, taking total losses for the day to 22 per cent.
The broad selloff in cryptocurrencies also saw Ether, the coin linked to the Ethereum blockchain network, plunge more than 10 per cent, as reported by Reuters.
Based on cryptocurrency data platform Coingecko, the market capitalisation of the 11,392 coins it tracks dropped nearly 15 per cent to $2.34 trillion. That value had briefly crossed $3 trillion last month, when Bitcoin hit a record $69,000.
The plunge follows a volatile week for financial markets. Global equities and benchmark US bond yields tumbled on Friday after data showed US job growth slowed in November and the Omicron variant of the coronavirus kept investors on edge.
Justin d’Anethan, Hong Kong-based head of exchange sales at cryptocurrency exchange EQONEX, said he had been watching the increase in leverage ratios across the cryptocurrency markets as well how large holders had been moving their coins from wallets to exchanges. The latter is usually a sign of intent to sell.
“Whales in the crypto space seem to have transferred coins to trading venue, taken advantage of a bullish bias and leverage from retail traders, to then push prices down,” he told Reuters.
The selloff also comes ahead of testimony by executives from eight major cryptocurrency firms, including Coinbase Global CFO Alesia Haas and FTX Trading chief exec Sam Bankman-Fried, before the US House Financial Services Committee on December 8.
The hearing marks the first time major players in the crypto markets will testify before US lawmakers, as policymakers grapple with the implications of cryptocurrencies and how to best regulate them.