Bitcoin’s flash crash expresses the year-end bulls

The representation of the cryptocurrency Bitcoin can be seen in this illustration from November 29, 2021. REUTERS / Dado Ruvic / Illustration

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December 6 (Reuters) – A weekend Bitcoin crash that wiped out a fifth of its value and liquidated positions valued at $ 2 billion raised investor expectations for a massive surge in the world’s largest cryptocurrency by the time End of the year clouded.

Cryptocurrency analysts weren’t entirely sure what sparked the strong sales, but pointed to the decline in margin credit, new futures positions, and the activity of large Bitcoin owners as evidence of a mass liquidation.

Bitcoin fell as low as $ 41,967.5, a level that made it 40% cheaper than the November 10th record of $ 69,000. It was back above $ 47,000 on Monday, with many investors still nursing wounds.

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“Fourth quarter is going to be a tough month, the $ 100,000 prospect as many people suggested from various round numbers, technical analysis that is now out of reach,” said Matt Dibb of Stackfunds, a Singapore-based crypto fund provider.

“Our assessment will be neutral to bearish in the short term. And recalibrate.”

While the cryptocurrency world is no stranger to volatility, Saturday’s crash was the biggest since Bitcoin prices fell 31% on May 19. Bitcoin’s market capitalization fell from $ 1.25 trillion on October 21 to about $ 931 billion, according to cryptocurrency analytics platform Coinglass.

Bitcoin

Die-hard cops and the dip-buying investors also played a role on Saturday.

According to another analytics platform, CryptoQuant, Bitcoin’s Korea Premium Index, or what is often referred to as the Kimchi Premium, hit 7.72. This index, which measures the difference in the price of Bitcoin between South Korean exchanges and other exchanges and shows how strong the bids are among this risky population, was negative a month ago.

El Salvador President Nayib Bukele said the Central American country had acquired 150 more bitcoins in addition to the 100 it bought a week earlier. Continue reading

TOKENS AND BLOCKS

Other popular tokens, including the second largest cryptocurrency Ether and Solana, were dragged down, last trading 3.6% and 7.6% respectively. Both of them have significantly outperformed Bitcoin’s profits over the past year.

The total market cap of the cryptocurrency market is now $ 2.35 trillion, according to CoinGecko, after surpassing $ 3 trillion last month.

Performance of selected cryptocurrencies

The slow, wider adoption of digital assets, however, has not been interrupted by Bitcoin changes or wider concerns about policy tightening around the world. Royal cinemas operated by Cineworld (CINE.L) and AMC Entertainment (AMC.N) announced partnerships with digital wallet companies last month to accept cryptocurrencies for the purchase of tickets and popcorn.

The Jack Dorsey-led rebranding (SQ.N) of the payment giant Square in “Block” also demonstrated the willingness of more companies to get on the blockchain train.

Cryptocurrency fans and critics alike will hear the testimony of the top executives of eight major cryptocurrency firms, including Coinbase Global (COIN.O) Chief Financial Officer Alesia Haas and FTX Trading CEO Sam Bankman-Fried, before the US House Financial Services Committee on Dec 8th read

A particular focus of the regulatory authorities are “stablecoins”, i.e. digital currencies whose value is linked to a traditional asset such as the dollar. Stablecoins are used to facilitate trading in other cryptocurrencies. Continue reading

Tether, the largest stablecoin with a market capitalization of more than $ 75 billion, recently came under fire for disclosing its dollar reserves, which has made some investors suspicious. Continue reading

“When (the US Securities and Exchange Commission) cracks down on stablecoins, algorithmic stablecoins like TerraUSD will be king,” said Will Hamilton, head of trading and research at Trovio Capital Management, which focuses on digital assets.

Bitcoin’s spot trading volume in Tether fell for the third straight month in November, according to data from CryptoCompare, while the volume of the second largest stablecoin, USD Coin, rose 11%.

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Additional coverage from Alun John in Hong Kong; Editing by Vidya Ranganathan and Alex Richardson

Our Standards: The Thomson Reuters Trust Principles.