Bitcoin edged higher on Thursday after plunging to its lowest level since February on Wednesday. The previous day’s rout sparked a wider selloff among cryptocurrencies and stocks that have benefited from crypto’s surge.
After an 11% drop on Wednesday following China’s announcement that digital tokens could not be used as payment, Bitcoin rose nearly 5% in early trading Thursday. Ether, the second-largest cryptocurrency by market capitalization, was up 0.3% after falling more than 20% on Wednesday. Dogecoin gained 20% from 5 p.m. yesterday, and 64% from where it was 24 hours ago after Elon Musk tweeted “How much is that Doge in the window?”
Crypto exchange Coinbase Global (COIN) and MicroStrategy (MSTR), which has a large stake in Bitcoin, were up 2.5% and 3.3%, respectively. Shares of both companies fell on Wednesday.
“There wasn’t a single catalyst behind the moves, but since its April peak there’ve been a number of headwinds for Bitcoin, and the latest Chinese move on the issue has played into broader concerns that regulators more widely could move to clamp down on the usage of cryptocurrencies, not least following the Colonial pipeline attack which led to a ransom that was reportedly paid for in crypto,” said strategists at Deutsche Bank led by Henry Allen.
Analysts warned that crytpo investors may see more volatility ahead.
“The recent collapse of cryptos are a useful reminder to investors that e-currencies are—just like every other financial asset—subject to market movement or even riskier due to the lack of clarity of crypto exchanges, with the majority suffering from poor liquidity and an absence of fundamentals to support them,” he said.
Carlo Alberto De Casa, chief analyst at ActivTrades, said that gold lost 45% of its value over the space of more than four years, while Bitcoin has dropped as much as 55% from its April 14 peak.
“I think the mood could sour further and risky assets could have another rough day,” said Marshall Gittler, head of investment research at BDSwiss Holding.
Write to [email protected]
