© Reuters. FILE PHOTO: A representation of the virtual currency Bitcoin can be seen in this picture in front of a stock graph
By Tom Wilson and Tom Westbrook
LONDON / SINGAPORE (Reuters) – fell 17% on Tuesday, triggering a sell-off in cryptocurrency markets as investors grew nervous at high valuations and leveraged players took profits.
The world’s largest cryptocurrency saw its biggest daily decline in a month, falling to just $ 45,000. Bitcoin last fell 11.3% at 09.3 GMT.
The decline prolonged a slump of nearly a fifth from a record high of $ 58,354 on Sunday – although Bitcoin continued to climb around 60% for the year.
“The types of rallies we’ve seen are unsustainable and only encourage retreats like this,” said Craig Erlam, senior market analyst at OANDA.
Ether, the world’s second largest cryptocurrency by market capitalization, which often moves in tandem with Bitcoin, also fell more than 17%, most recently buying $ 1,461, down nearly 30% from last week’s record high.
Cryptocurrency markets have been hot this year as large money managers and corporations take the emerging asset class seriously, piling money into the sector, and building confidence among small speculators.
A $ 1.5 billion investment in crytocurrency by electric car maker Tesla (NASDAQ 🙂 this month helped push Bitcoin above $ 50,000, but may now put pressure on the company’s share price since it is sensitive to movements in Bitcoin.
Rising government bond yields in recent days have hit riskier assets and impacted leveraged bitcoin markets, said Richard Galvin of crypto fund Digital Asset Capital Management.
“The markets have been pretty hit from a leverage point of view, which didn’t help,” he added.
US Treasury Secretary Janet Yellen, who has drawn attention to the need for tighter regulation of cryptocurrencies, also said on Monday that Bitcoin is extremely inefficient at conducting transactions and a highly speculative asset.
Critics say that the high volatility of the cryptocurrency is one of the reasons why it has so far not been widely accepted as a means of payment.
According to analysts, key price levels have played a huge role in determining the direction of the crypto markets.
“Because we lack the basics, the big numbers have proven to be points of support and resistance,” said Michael McCarthy, chief strategist at Brokerage CMC Markets in Sydney.
“$ 50,000, $ 40,000, and $ 30,000 are the top chart levels right now. If we see them add up to $ 50,000, sales could accelerate.”
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