Bitcoin and other cryptocurrencies fell sharply Saturday, another sign that investors were pulling back from riskier bets after this week's stock-market selloff, MarketWatch reported.
Bitcoin, the largest cryptocurrency by market value, was down 18 per cent at $46,571.84 according to data from CoinDesk. It temporarily dipped to $42,000 before bouncing back. Ether, the second-largest cryptocurrency, was down close to 16 per cent, the report said.
The declines were widespread across the crypto universe. Other widely traded cryptocurrencies including Solana, Dogecoin and Shiba Inu coin lost more than a fifth of their value.
Disquiet in the stock market over the new Omicron variant of Covid-19 and the Federal Reserve's response to inflation might have played a role, the report said.
Another possible factor accelerating the bitcoin selloff was the unwinding of heavily leveraged crypto derivatives, said Noelle Acheson, head of market insights at cryptolender Genesis Global Trading. She pointed to a large sell order that might have triggered margin calls and liquidations for investors, the report added.
Higher rates make holding speculative assets such as bitcoin less attractive. When the Federal Reserve raised rates in 2017 and 2018, bitcoin prices fell dramatically, referred to among crypto aficionados as a bitcoin winter. The coin took off again during the pandemic. Bitcoin hit an all-time high on November 9 of $67,802.
The price of bitcoin seesawed later Saturday after El Salvador President Nayib Bukele, whose country adopted bitcoin as a national currency in September, said in a Twitter post that the country had bought 150 coins for an average of $48,670 each. "El Salvador just bought the dip!" he said. He later wrote that the country had "Missed the f***ing bottom by 7 minutes," followed by a laughing emoji, the report added.