Sudden crypto drop sends bitcoin to three-week low



By Tom Westbrook and Hannah Lang

SINGAPORE/WASHINGTON, Aug 19 (Reuters) - Cryptocurrencies fell sharply on Friday, with sudden selling dragging bitcoin to a three-week low, with analysts divided over the reason behind the decline.

Bitcoin fell as much as 7.7% to $21,404 over a few minutes during the European morning, at around 0640 GMT. It recovered slightly to trade around $21,528 at 1651 GMT, down 8.05% on the day.

Ether ETH= was last down 8.32% at $1,721.

Marcus Sotiriou, analyst at digital asset broker GlobalBlock, in a research note said there did not appear to be a single catalyst that led to the heavy selling.

"But the S&P 500 rejecting and failing to continue its recovery contributed to bitcoin’s drop," he said. The S&P 500 was down around 1% by early Friday afternoon.

Meanwhile, Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, suggested the move was a "result of a large sale transaction."

"It’s not showing the pattern of a flash crash, as the assets didn’t immediately rebound sharply but sank even lower in the hours that followed," she said.

Streeter said it appeared the cryptocurrency cardano had been the first to move, followed by bitcoin and ether, and then others such as the altcoin dogecoin.

Cryptocurrencies have fallen dramatically so far this year, as Federal Reserve rate hikes and ultra-high inflation prompt investors to ditch riskier assets.

Craig Erlam, senior market analyst at Oanda, said bitcoin's failure to recover its losses "suggests there is substance to the move".

Such sharp moves are common in the highly volatile cryptocurrency market. On June 15, bitcoin plunged more than 15% as investors were spooked by the collapse of a so-called stablecoin, TerraUSD, and a major crypto lender freezing customer withdrawals.

Friday's move put bitcoin on track for its worst day since the June meltdown.

"Speculating in cryptocurrencies is extremely high risk and is not suitable for the vast majority of people," Hargreaves Lansdown's Streeter said.
Reporting by Tom Westbrook, Elizabeth Howcroft, Samuel Indyk and Hannah Lang; Editing by Kirsten Donovan and Tomasz Janowski

Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.

All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.

Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.

We are using cookies to give you the best experience on our website. Read more or change your cookie settings.

Risk Warning: Your capital is at risk. Leveraged products may not be suitable for everyone. Please consider our Risk Disclosure.