Bitcoin extends slide, heads for worst week since March 2020

FILE PHOTO: Representations of virtual currency Bitcoin are seen in this picture illustration taken taken March 13, 2020. REUTERS/Dado Ruvic/Illustration//File Photo

SINGAPORE (Reuters) - Bitcoin fell heavily on Friday and was heading toward its sharpest weekly drop since last March, as worries over its technology and regulation extended a pullback from recent record highs.

The world's most popular cryptocurrency fell more than 5% to an almost three-week low of $28,800 in the Asia session, before steadying around $30,000. It has lost 15% so far this week, the biggest drop since a 33% fall in March.

Traders said a report posted to Twitter by BitMEX Research https://twitter.com/BitMEXResearch/status/1351855414103715842, suggesting that part of a bitcoin may have been spent twice, had hurt confidence in the technology underlying the asset class and also that a pullback was overdue after a huge rally.

"You wouldn't want to rationalise too much into a market that's as inefficient and immature as bitcoin, but certainly there's a reversal in momentum," said Kyle Rodda, an analyst at IG Markets in Melbourne, in the wake of the BitMEX report. "The herd has probably looked at this and thought it sounded scary and shocking and it's now the time to sell."

Bitcoin is now around 30% below the record high of $42,000 it hit two weeks ago, losing ground amid growing concerns that it is one of a number of financial market price bubbles and as cryptocurrencies catch regulators' attention.

During a U.S. Senate hearing on Tuesday, Janet Yellen, President Joe Biden's pick to head the U.S. Treasury, expressed concerns that cryptocurrencies could be used to finance illegal activities.

That followed a call last week from European Central Bank President Christine Lagarde for global regulation of bitcoin.

Still, some said the pullback comes with the territory for an asset that is some 700% above the 2020 low of $3,850 hit in March.

"It's a highly volatile piece," said Michael McCarthy, strategist at brokerage CMC Markets in Sydney. "It made extraordinary gains and it's doing what bitcoin does and swinging around."

Second-biggest cryptocurrency ethereum also dropped to a one-week low, of $1,041.22, before recovering to steady around $1,144.

(Reporting by Tom Westbrook; editing by Richard Pullin and Leslie Adler)