Bitcoin retreats 20% from all-time high as risk assets slump REUTERS/Dado Ruvic/Illustration
Bitcoin retreats 20% from all-time high as risk assets slump REUTERS/Dado Ruvic/Illustration

Bitcoin retreats 20% from all-time high as risk assets slump

By The Washington Post Time of article published Nov 26, 2021

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Bitcoin tumbled 20% from record highs notched earlier this month as a new variant of the coronavirus spurred traders to dump risk assets across the globe.

The world's largest cryptocurrency fell as much as 8.9% to $53,624 on Friday during London trading hours. Ether, the second-largest digital currency, dropped more than 12%, while the wider Bloomberg Galaxy Crypto Index declined as much as 7.5%.

A new variant identified in southern Africa spurred liquidations across markets, with European stocks falling the most since July and emerging markets also slumping.

Bitcoin itself has been under pressure since reaching a record of almost $69,000 earlier this month on enthusiasm over the first U.S. exchange-traded fund linked to futures on the digital asset. It's currently sitting near its 100-day moving average of $53,940, which served as support during its late-September pullback.

"Ironically, yesterday afternoon crypto markets were starting to look pretty optimistic with hopes of a Santa Claus rally," said Jonathan Cheesman, head of over-the-counter and institutional sales at crypto-derivatives exchange FTX, in a note Friday. It "will be a nervous weekend for sure."

Coming into this week, analysts have cited a number of crypto obstacles including U.S. tax-reporting requirements for digital currencies and China's intensifying regulatory clampdown. Now, the prospect of a new virus strain risks undercutting liquidity and risk appetite for the speculative sector.

As ever, bulls remain committed to the view that more institutions and retail investors will embrace virtual currencies.

"This is a market reaction/correction within an uptrend," said Vijay Ayyar, head of Asia-Pacific at Luno, who pointed out that options-expiration days -- like Friday -- can often be volatile. He said a drop down to the $48,000 to $50,000 range might be more concerning, and that "20% pullbacks are normal in a Bitcoin uptrend as we've seen many times before."

For now, Bitcoin's pullback is a sideshow to the global market declines on the new variant identified as B.1.1.529 as policy makers rush to retool cross-border travel policies.

The largest token is still up more than 85% this year.

THE WASHINGTON POST

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