Bitcoin plunged below $60,000 for the first time since November 1, and ether, a cryptocurrency, also plummeted. Bitcoin, which set a new all-time high of $69,000 last week, plummeted to $58,600, its lowest level in 19 days, and was down approximately 7% on the day. It is now down 14% from its previous high.
Meanwhile, Ether, the world’s second-largest cryptocurrency, has dropped to a 19-day low of $4,109.03, and is currently down 9.7% on the day.
If the trend continues, it will be the greatest daily drop in both cryptocurrencies since September.
While profit-taking following the massive price rise emerged as the most important factor, analysts pointed to other factors such as bitcoin’s blockchain upgrade over the weekend, higher U.S. inflation, and China’s recent directive to its state-owned firms not to engage in cryptocurrency mining as reasons for the more cautious sentiment.
Since January, the value of Bitcoin has more than doubled. If it falls below $58,000, the correction might be severe, according to Craig Erlam, senior market analyst at online broker Oanda.
“Given how much it’s failed to make meaningful advances higher since it reached good support at the end of October, it might be the spark for a larger drop,” Erlam wrote.
The news that Twitter will not be investing in cryptocurrencies, as well as the SEC’s denial of VanEck’s application to launch the first U.S. spot bitcoin exchange-traded fund, were both depressing.
“There’s a good chance we’ll see some choppy two-way movement here, with 68,000 capping the upside and 57,000 capping the downside.” In a client note, Chris Weston, head of research at Melbourne brokerage Pepperstone, said.
Traders have been less ready to pay to retain long positions in bitcoin futures in the last week. According to cryptocurrency analytics platform CryptoQuant, average financing rates fell to 0.00354 percent on Tuesday, the lowest since late September and down from 0.04122 percent on November 10. Also read: McDonald’s Happy Meal has a new surprise! ITC drinks are included with the food combo.
The perpetual swaps market, which is a big element of the bitcoin derivatives sector, uses funding rates to gauge sentiment. Positive financing rates indicate bullish traders, as they must pay to hold a long position, whereas negative rates indicate bearish traders, as they must pay to hold a short position.