Bitcoin fell sharply on Monday after surging to its latest record high a day earlier as a selloff in global equities curbed risk appetite, with traders citing the unwinding of highly leveraged long positions in the cryptocurrency.

The most popular cryptocurrency fell 8% to under US$53 000, setting it on course for its worst day in a month. It was last down 7.5% at $53 177.

Bitcoin rallied on Sunday to a peak of $58 354, with its latest bout of weekend price moves taking its gains so far this year to almost 100%. Its market capitalisation grew to $1-trillion on Friday.

Rival cryptocurrency ethereum, which tends to move in tandem with bitcoin, also tumbled after hitting a record high on Saturday. It was last down 8.7% at $1 765.

Bitcoin’s meteoric rise to over $50 000 has been fuelled by signs that it is gaining acceptance among mainstream investors and companies, from Tesla and Mastercard to BNY Mellon.

‘Over-leveraged long positions’

“The selloff across the board this week is a result of some of last week’s exuberance easing, as well as a much needed unwinding of over-leveraged long positions,” said Ross Middleton, co-founder of cryptocurrency exchange DeversiFi.

Tesla boss Elon Musk, whose tweets on bitcoin have added fuel to the cryptocurrency’s rally, said on Saturday the price of bitcoin and ethereum seemed high.

“We do tend to think that there’s a good chance of a down week and small correction coming in off of this, although it does little to dull medium-term prospects,” said Joseph Edwards of Enigma Securities, a cryptocurrency brokerage in London. — Reported by Tom Wilson, (c) 2021 Reuters