Bitcoin plunges, Ether has worst drop since 2021 as crypto sinks
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Bitcoin is under pressure from a bout of risk aversion in global markets.
PHOTO: REUTERS
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SINGAPORE – Cryptocurrencies reeled from a bout of risk aversion in global markets on Aug 5, at one point sending Bitcoin down more than 16 per cent and saddling second-ranked Ether with the steepest fall since 2021.
The world’s largest token Bitcoin was trading 12.8 per cent lower at US$52,761 at around 5pm, according to CoinDesk, adding to a 13.1 per cent drop last week that was the worst since the period when the FTX exchange imploded.
Ether shed over a fifth of its value before paring some of the slide to change hands at US$2,330, down 19.7 per cent. Most major coins nursed losses.
About US$900 million (S$1.19 billion) of bullish crypto positions using derivatives were liquidated in the past 24 hours, CoinGlass data shows, a sign of leveraged bets coming unstuck.
Dr Khushboo Khullar, a venture partner at Lightning Ventures – which invests in Bitcoin-linked companies – said the broad stock slump had caused some “panic”, spurring investors to rush for liquidity to settle margin calls. She argued that the crypto retreat is a “fine buying opportunity”.
The declines come as a global stock sell-off intensifies
Bitcoin exchange-traded funds (ETFs) in the US suffered their largest outflows in about three months on Aug 2. One question is whether the products will attract dip buyers when they resume trading or succumb to deeper exits.
Digital assets are a victim in part of the unwinding yen carry trade, as speculators adjust to higher interest rates in Japan, according to Mr Hayden Hughes, head of crypto investments at family office Evergreen Growth.
“Those investors are also fighting a drastic increase in hedging costs based on the volatility in the US dollar-Japanese yen trading pair,” Mr Hughes said.
Bitcoin has been buffeted by a range of factors since hitting a record of US$73,798 in March, including shifting political fortunes in the US as pro-crypto Republican Donald Trump and his Democratic opponent, Vice-President Kamala Harris – who has yet to detail a digital-asset policy stance – lock horns in the presidential race.
Also hanging over the market are possible sales of Bitcoin seized by governments and the risk of a supply overhang from tokens returned to creditors through bankruptcy proceedings.
The Bitcoin retreat at its nadir on Aug 5 left the token at levels last seen in February. Ether, meanwhile, earlier fell back to prices previously seen at the turn of the year. Similar to Bitcoin, one unknown is how investors in new US spot-Ether ETFs will react.
Mr Justin D’Anethan, head of Asia-Pacific business development at market-maker Keyrock, said the crypto rout appeared somewhat Ether-led, flagging social-media rumours of institutional selling of Ether-related assets.
Bitcoin’s year-to-date advance has moderated to approximately 21 per cent, compared with an 18 per cent climb in gold and an 8 per cent jump in a gauge of global stocks. BLOOMBERG
