A slump in bitcoin on Wednesday saw the cryptocurrency erase all gains it had made so far this year, bucking a long-running upswing that outperformed a global malaise in traditional assets.
The world’s largest digital token fell as much as 9.2% to dip below US$41 000 shortly after 7am in New York, a day after the digital asset had topped the $45 000 mark in a 21-month high. The volatility also spilled over into crypto-linked stocks, with shares in crypto exchange Coinbase Global falling 6.7%.
“We will likely see some increased volatility in the short term as markets start to measure risk in all asset classes, as we enter a year that has many question marks,” said Fadi Aboualfa, head of research at crypto custodian Copper Technologies, in an e-mail on Wednesday. “Regardless, we saw markets tank just the same at the start of December, only to rally up further.”
On a tear
Bitcoin has been on a tear ahead of an upcoming 10 January deadline that could see the US Securities and Exchange Commission approve the first exchange-traded fund tied directly to the asset’s spot price. The cryptocurrency’s value rose almost 160% in 2023, alongside a broader rally in digital-asset fortunes.
Even so, Matrixport analyst Markus Thielen said in a note that the SEC will decline all bitcoin ETF proposals this month. Thielen said recent applications will still fall short of requirements that must be met before the SEC signs off on them. — Emily Nicolle, (c) 2024 Bloomberg LP