Cryptocurrencies fell on Tuesday, with Bitcoin briefly dipping below $60 000 and Ether touching its lowest level this month, in a broad-based retreat from recent record highs.
The largest digital token dipped as much as 8.2% to $58 661, the biggest intraday drop since September 24. Second-ranked Ether tumbled more than 10%. Global crypto market cap has dropped some 10% in the past 24 hours to $2.7 trillion, according tracker CoinGecko.
“After several days of gains, which saw Bitcoin hover near it’s all-time high as many other altcoins managed to reach new highs, we are seeing a significant pullback,” said Walid Koudmani, an analyst at XTB Market. “The extreme volatility that the market is prone to could lead to a potential domino effect if more negative news were to emerge and take prices to new lows.”
Technical indicators had suggested the strong run of late across the notoriously volatile market was due for a pause.
Some analysts also attributed the dip to new tax-reporting requirements for digital currencies that are part of the $550 billion infrastructure bill, which President Joe Biden signed into law Monday.
“We’ve seen the US infrastructure bill get signed, which has initiated a selloff from traders who are concerned about regulation and taxation,” said Hayden Hughes, chief executive officer of Alpha Impact, a social-trading platform.
Hughes also cited concerns about China continuing its regulatory crackdown. The country will study the option of levying punitive power prices for companies that are involved in cryptocurrency mining, National Development and Reform Commission spokeswoman Meng Wei said at a press conference.
Meanwhile, Twitter Inc. Chief Financial Officer Ned Segal said in an interview Monday with Dow Jones that it didn’t make sense to invest the company’s cash in crypto assets such as Bitcoin. Twitter co-founder and Chief Financial Officer Jack Dorsey is one of the highest profile advocates of cryptocurrencies.
Bitcoin has more than doubled this year, while Ether is up about sixfold. Both scaled records last week amid a fervor for digital assets driven by speculative demand and controversial arguments that they can hedge inflation risks.
It “would be unusual to keep moving up without corrections,” said Vijay Ayyar, head of Asia Pacific with crypto exchange Luno in Singapore. He argued that “we’re seeing a healthy pullback” after a prolonged rally.
Bitcoin was down 4.9% to $60 786 as of 7:18 a.m. in New York.