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Bitcoin tumbles after reaching $40 000 on Amazon speculations

Rival coins including Ether and Litecoin also tumbled.
Image: Bloomberg

Bitcoin fell below $37 000 after briefly surpassing $40 000 following Amazon.com Inc.’s denial that its job posting for a digital currency executive meant that it will accept the token for payments this year.

Earlier Monday, the job posting from the retail giant seeking an executive to develop the company’s “digital currency and blockchain strategy” had stirred questions among analysts over whether the move could eventually lead to Amazon accepting Bitcoin as a method of payment. Shortly before 4:00 p.m. in New York, an Amazon spokesperson’s denial that the company will accept the token for payments this year caused its price to plunge to $37 598.

As of 11:20 a.m. in Hong Kong, Bitcoin had fallen as much as 3.5% and was trading at about $36 620. Rival coins including Ether and Litecoin also tumbled.

Investors rushing to cover bearish bets had fueled the earlier rally that drove the coin at one point up more than 17% on Monday to $40 545, its highest since June 15. More than $950 million of crypto shorts were liquidated on Monday, the most since May 19, according to data from Bybt.com.

“Shorts were piling up as we were moving down, assuming we were looking at a minimum of $25 000, which was expected across the board,” said Vijay Ayyar, head of Asia Pacific with crypto exchange Luno. “But then there was heavy accumulation in the $29 000 to $30 000 region which caught a lot of those shorts unaware and hence led to the spring upwards.”

Bitcoin’s current price volatility is part of a wider multi-wave correction since hitting a record in April, Ayyar said. The price could rebound to as much as $45 000 in the near-term before another potential drop to complete the correction, he said.

“We’re still seeing the correction play out,” he added.

Meanwhile, Bloomberg News reported a US probe into Tether is homing in on whether executives behind the token committed bank fraud. Ether was down as much as 5%, reversing Monday’s earlier advance ahead of an upgrade due on August 4 that will reduce the amount of outstanding tokens by destroying some of them every time it’s used to fuel transactions on the world’s most-used blockchain.

The surge on Monday had brought crypto markets back to life after they’d been stuck in the doldrums for months. On Binance, the largest crypto exchange, Bitcoin perpetual contracts jumped as much as 30% over an hour in early New York trading, a sign of extreme volatility in one of the coin’s most liquid derivatives.

There’s been less volatility in Bitcoin since mid-May and the enthusiasm for crypto has dissipated somewhat amid a regulatory crackdown in China and criticism for its toll on the environment.

The Amazon job posting was first reported by CoinDesk last week.

“It is exciting to see Bitcoin rally 10% overnight,” said Loukas Lagoudis, executive director at digital-assets hedge fund ARK36. “However, investors should proceed with caution and avoid overtrading, noting that the liquidity is still relatively low as we are heading into the holiday season.

© 2021 Bloomberg

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The support level of $29k has been textbook and has proven its strength. The forces of authoritarian restriction or acceptance of use have become the primary drivers. Any speculation of increased usage sways the argument. The question would appear to be: Will the future bring greater freedom or further totalitarian constraint? The widespread hesitance with regulation suggests many pockets of official desire to enable rather than contain malfeasance.

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