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Bitcoin losses accelerate after weekend rally to record high

Retreats below its 10-day moving average.
Image: Bloomberg

Bitcoin extended losses as a rally that took it past $61,000 over the weekend unwinds, reminding investors of the digital token’s volatility.
The largest cryptocurrency slid as much as 5.5% Tuesday and was trading at about $54,300 as of 11:10 a.m. in Hong Kong. Bitcoin has still surged about 1 000% over the past year, a mesmerising rally that outstripped more traditional assets like stocks and gold.

The Saturday jump to a record was partly linked to optimism over US stimulus checks, since some of the cash could end up in financial markets. Chart watchers were looking for the digital coin to hold above thresholds such as the previous peak of $58,350 in February, to boost confidence in a bullish leg higher.

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Investors are taking some profit after Bitcoin’s recent run of gains, and it may bounce back to as high as $62,000 before another slide down, said Vijay Ayyar, head of Asia Pacific with crypto exchange Luno in Singapore.

“We’ll see buying resume, given the stimulus coming in and stock markets starting to look good again,” he said.

Bitcoin and other cryptocurrencies have returned to prominence over the past year amid signs of broader investor interest, such as Tesla Inc.’s $1.5 billion Bitcoin purchase. Detractors argue the token may be in a speculative bubble spurred by massive stimulus injections.

Drop Expected
The crypto craze is feeding into pockets of the stock market. For instance, stocks linked to the mining and trading of the digital asset are soaring, in some cases outpacing even Bitcoin — US-listed miners Riot Blockchain Inc. and Marathon Digital Holdings Inc. are up more than 8,700% over the past year.

“There will certainly be some correction in Bitcoin and other cryptocurrencies because they have rallied so much in a short period of time,” said Atichanan Pulges, chief financial officer of Bitkub Capital Group Holdings, operator of Thailand’s biggest cryptocurrency exchange.

“The long-term outlook remains very bullish, as many more leading financial institutions are considering adopting cryptocurrencies,” Atichanan said.

© 2021 Bloomberg

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