Bitcoin lost a fifth of its value on Saturday as a combination of profit-taking and macro-economic concerns triggered a selloff of nearly a billion dollars in cryptocurrencies.
Bitcoin was down 12% at $47,495 (about Rs 35.76 lakh) at 9:20 GMT. It fell to $41,967.5 (approximately Rs 31.60 lakh) during the session, taking the total loss of the day to 22 per cent.
The widespread sell-off in the cryptocurrency also saw ether, the coin tied to the Ethereum blockchain network, fall by more than 10%.
Based on cryptocurrency data platform Coingecko, the market capitalization of the 11,392 coins it tracked fell nearly 15% to $2.34 trillion. This value briefly crossed $3 trillion last month, when bitcoin hit a record $69,000 (roughly Rs.51.96 lakh).
The decline comes after a volatile week for financial markets. Global equities and benchmark US bond yields fell on Friday after US job growth slowed in November and the Omicron version of the coronavirus kept investors on edge.
Hong Kong-based head of exchange sales at cryptocurrency exchange EQONEX, Justin D’Anethan, said he was seeing an increase in leverage ratios in cryptocurrency markets as well as how large holders were moving their coins from wallet to exchanges. The latter is usually an indication of an intention to sell.
“Whales in the crypto space move coins to trading venues, taking advantage of a bullish bias and retail traders, then to push prices down,” he said.
The sell-off also comes ahead of testimony from executives from eight major cryptocurrency firms, including Coinbase Global CFO Alessia Haas and FTX Trading CEO Sam Bankman-Fried, before the US House Financial Services Committee on December 8.
For the first time, major players in the cryptocurrency market will testify before US lawmakers, as policymakers grapple with the implications of cryptocurrencies and how to best regulate them.
Last week, the US Securities and Exchange Commission (SEC) rejected WisdomTree’s second spot-bitcoin exchange-traded fund proposal.
Data from another platform, Coinglass, showed that nearly $1 billion worth of cryptocurrencies were liquidated in the past 24 hours, with the bulk of them on digital exchange Bitfinex.
“If anything, this is an opportunity to buy the dip for many investors who may have felt at first that they missed the boat. We can see that Tether is bought at a premium, suggesting that people We’re creating cash within the crypto space, to do just that,” D’Enathan said, referring to the largest stablecoin in the cryptocurrency world.
The drop in bitcoin funding rates – the cost of holding bitcoin through perpetual futures that peaked at 0.06 percent in October – also showed traders had turned bearish.
The funding rate on crypto trading platform BitMEX fell for most of November to a negative 0.18% from its low of 0.01%.