Bitcoin sell-offs plummeted on Wednesday, providing some relief to holders of the volatile cryptocurrency after a sudden crash the previous day wiping out billions of dollars of its value.
The largest cryptocurrency by market capitalization is down 1.3% to settle at $4,6154.44 a piece, according to 5pm ET data from CoinDesk. It briefly fell 17% over the course of a few minutes on Tuesday and ended the day down about 10%.
Other digital assets also fell slightly on Wednesday. Cardano’s ada token and prank cryptocurrency dogecoin are down about 0.3% and 0.4%, respectively, according to Kraken. Ether, the second-largest company, settled up 1.7% after trading lower earlier in the day.
There was not a single catalyst to precipitate the sale. Analysts said that a 70% increase in bitcoin’s value since late July — combined with the euphoria associated with El Salvador’s adoption of bitcoin as the national currency — could drive traders into profit.
Investors have also been ramping up their bets on other cryptocurrencies in recent months, boosting the Ethereum and Cardano blockchain and driving up the prices of non-fungible tokens.
Bitcoin and rival digital assets are also known to be remarkably volatile, with prices swinging wildly on rumors, influencer tweets, or shifting sentiment among groups of traders huddled together on social media to make speculative bets.
During the recent bout of volatility, bitcoin has lost more than $100 billion in market value since Sunday. Other cryptocurrencies have also taken a big hit. Ether lost nearly $56 billion, and Ada Cardano lost more than $16 billion.
“Profit taking was very much on the table,” said Naim Aslam, London-based chief market analyst at brokerage AvaTrade. “In our view, this is a very healthy dip.”
There are a range of factors that could dampen optimism and could counter a further rally in Bitcoin. Coinbase Global company
He said on Wednesday that the Securities and Exchange Commission has threatened to sue a cryptocurrency exchange if it launches a program that allows users to earn interest by lending crypto assets. Coinbase shares fell 3.2% on Wednesday.
Glitches in the rollout of El Salvador’s adoption of bitcoin as the national currency may dampen expectations among some traders.
The Central American country’s president, Neb Bukele, said early Wednesday that the government’s bitcoin e-wallet will be closed between 1 a.m. and 6 a.m. local time to make improvements and address problems reported by users.
Analysts said the friction between the growing adoption of cryptocurrencies worldwide on the one hand and regulators paying more attention to the market on the other could lead to more volatility in digital assets.
– Caitlin McCabe contributed to this article.
write to Kaitlin Ostroff at firstname.lastname@example.org
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It appeared in the September 9, 2021, print edition as “Bitcoin Steadies After a Flash Crash”.