Bitcoin delivered another bout of its notorious volatility in a sharp tumble toward $40,000 amid a broader crypto selloff.
The largest token sank as much as 7.5% to $40,521 before paring some of the losses to trade 4% lower at $42,095 as of 11:12 a.m. in Singapore on Monday.
Smaller tokens like Ether, XRP, Polkadot and Avalanche also fell. A gauge of the largest 100 digital assets shed about 4%, the largest drop since Nov. 22.
Bitcoin has been on a tear this year on expectations that regulators will allow the first U.S. spot Bitcoin exchange-traded funds, widening the potential base of crypto investors. Bets that the Federal Reserve will cut interest rates next year also encouraged a rally in virtual currencies.
“Market leverage had risen materially,” said Sydney-based Richard Galvin, co-founder at Digital Asset Capital Management. “The current fall looks like a market deleveraging as opposed to any fundamental news catalyst.”
Investors are also braced this week for U.S. inflation data and the Fed’s final policy meeting of 2023, both of which could test aggressive wagers on rate cuts.
“It makes sense to see some profit taking,” said Tony Sycamore, a market analyst at IG Australia Pty. He expects falls toward the $40,000 to $37,500 range to be “well-supported” by dip buyers.
Bitcoin has jumped more than 150% this year, energizing a wider digital-asset recovery from last year’s rout. But the token remains well below its 2021 pandemic-era record high of nearly $69,000.
This article was provided by Bloomberg News.