Bitcoin and ethereum prices hammered in steep selloffs
Bitcoin and ethereum, the two largest cryptocurrencies in the world, slammed the breaks on their record-setting sprees early this week.
- A stark warning in the UK and rising US bond yields dented price rallies of cryptocurrencies
- Bitcoin (BTC) price tanked on Sunday and Monday after hitting US$42,000 last week
- Meanwhile, Ether (ETH) price suffered its biggest one-day percentage loss in 10 months
Is the crypto bubble bursting?
Concern is brewing in the market that the cryptocurrency bubble looks set to pop, after plunges in the prices of bitcoin (BTC) and ether (ETH).
That followed the UK’s financial watchdog’s warning on Monday, that consumers investing in cryptocurrency ‘should be prepared to lose all their money’ given the high risks, price volatility, the products’ complexity, and a lack of regulation to protect consumers.
Rising US bond yields also lifted the US dollar broadly and hurt bitcoin, which was one of the popular bets against the dollar, Reuters reported.
Bitcoin tumbles from US$42,000 high
BTC, the world’s most popular and biggest cryptocurrency, started the week with a sharp correction. Its price sank as much as 21% over Sunday and Monday - its deepest two-day plunge since March 2020.
The token clawed back some losses in Asian trading on Tuesday (12 January), though BTC was still down 5.9% on the day to US$35,367 at around 09:15 SGT.
Vijay Ayyar, crypto exchange Luno’s head of business development, said on Monday that the parabola break might indicate the start of a larger price correction for bitcoin.
Some investors worry that BTC’s recent surges are defying logic, fuelled just by massive economic stimulus.
BTC’s price hit a new all-time high of US$42,000 last Friday (08 January). The same day, Bank of America strategists said ‘violent’ inflationary price action in markets helped BTC’s rally in the past two months, but warned that the cryptocurrency ‘blows the doors off prior bubbles’ such as the 1990s dot-com bubble.
Ethereum price plunges 23%
Meanwhile, smaller coin ethereum plummeted as much as 23% on Monday to a one-week low of US$985. That marked its worst one-day percentage drop since March 2020.
The altcoin’s price tends to move in tandem with bitcoin. At 09:17 SGT on Tuesday, ETH recovered slightly to trade at US$1,082, which was still a 11.5% drop from the previous day.
ETH is the cryptocurrency that flows within the ethereum network, and is typically used to pay transaction fees. Ethereum is an open software platform built on blockchain technology for decentralised applications.
Despite its sharp correction at the start of this week, ETH is still up by about 45% in 2021 to date, compared to around US$746 as at end-2020.
Last year, ETH recorded an eye-popping 600% price gain. It is the second-most traded cryptocurrency in the world.
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