Last week’s mania that pushed crypto assets to records as Coinbase Global Inc. went public turned on itself on the weekend, sending Bitcoin tumbling most since February.
After breaking a record, the world’s largest cryptocurrency plummeted as much as 15 percent. It was down 9% to $55,323 at 10:18 a.m. in New York. Ether, the second-largest cryptocurrency, fell as much as 18% to below $2,000 before paring losses. Binance Coin, XRP, and Cardano lost over 12%. Dogecoin, the token that began as a prank, was the only gainer among the 10 largest coins.
The weekend carnage came after a heavy week for the industry that saw the value of all coins rocket past $2.25 trillion in the run-up to Coinbase’s direct listing on Wednesday. The largest U.S. crypto exchange ended with $68-billion week, more than the New York Stock Exchange holders.
“Hindsight, it was unavoidable,” said Galaxy Digital creator Michael Novogratz in a Sunday post. “Markets were too excited about $Coin direct listing. Pumping base, coins like $BSV, $XRP and $DOGE. All were signals that the economy had too one direction. “
Dogecoin, which has little use and no fundamentals, rallied last week to be worth more than $50bn at one point before Saturday stumbled. Demand was so brisk for the token that investors trying to trade it on Robinhood crashed Friday’s platform a few times, the online exchange said in a blog post.
There was also speculation on Sunday in some news outlets that the plunge was due to fears that the U.S. Treasury may crack down on money laundering through digital assets.
“Today’s crypto world is waking up with a sore brain,” said Antoni Trenchev, co-founder of crypto lender Nexo. “Dogecoin’s 100% Friday rally was’ peak crowd, ‘after Bitcoin recording and Coinbase listing earlier this week. Euphoria in the breeze. And normally in the crypto world, when that happens, there’s a price to pay. “
Aside from the “unsubstantiated” report of a US Treasury crackdown, Trenchev suggested that the decline factors could have included “excess leverage, Coinbase insiders dumping equity after direct listing, and a mass hit Bitcoin miners in China’s Xinjiang province.”
Increasing mainstream awareness of cryptocurrencies has spurred Bitcoin’s rally as well as highlighting other tokens. Crypto interest rose again after PayPal to Square businesses started allowing Bitcoin transactions on their networks, and Wall Street firms like Morgan Stanley began offering access to tokens to some of the wealthiest clients. That’s amid lingering questions about their uncertainty and usefulness as a payment tool.
Governments are closer to inspecting sector-wide risks as the investor base expands.
Last week, Federal Reserve Chairman Jerome Powell said Bitcoin “is a bit like gold” in that it’s more of a speculative vehicle than a payment. European Central Bank President Christine Lagarde in January aimed at Bitcoin’s position in encouraging illegal activity, saying cryptocurrency allowed “funny companies.”
Turkey’s central bank barred the use of cryptocurrencies as a means of payment as of April 30, saying that the extent of anonymity behind digital tokens poses the possibility of “unrecoverable” losses. India would propose a law banning cryptocurrencies and fining anyone trading or possessing such properties, Reuters reported in March, citing an unnamed senior official with direct plan information.
To shape the emerging regulatory climate and address lingering digital token skepticism, crypto firms raise their top ranks. Bitcoin’s most ardent supporters see it as a modern-day value store and inflation buffer, while others fear it will create a speculative bubble.
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