Bitcoin slumps slamming brakes on rally

Bitcoin lost ground from a record high of $34,800 touched a day earlier

TOKYO/ LONDON:

Bitcoin fell sharply on Monday, losing ground from a record high of $34,800 touched a day earlier, with traders citing volatility in highly leveraged futures markets. Bitcoin fell more than 14% after earlier touching as high as $33,670, wiping out more than half its 20% rally from New Year’s Eve to a record $34,800 on Sunday. Bitcoin was last down 8% at $30,542. A functioning cryptocurrency derivatives market has developed since 2017, with offshore exchanges still offering highly leveraged trading. Moves in such markets can have an outsized effect on bitcoin’s price. “It’s the unwinding of some of that leverage,” said Richard Galvin of crypto fund Digital Asset Capital Management. Bitcoin’s record high came less than three weeks after it crossed $20,000 for the first time, on December 16. The world’s biggest cryptocurrency more than quadrupled in price last year. Traders said bitcoin’s drop on Monday was not unusual for the volatile asset, whose wild price swings have in part prevented it from becoming widely used as a currency.

Published in The Express Tribune, January 5^th, 2021.

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