Bitcoin rebound loses steam on rising regulatory concerns


Representations of the virtual currency Bitcoin stand on a motherboard in this picture illustration taken May 20, 2021. REUTERS/Dado Ruvic/Illustration

LONDON (Reuters) - Beset by rising regulatory pressure, bitcoin hovered around $40,000 on Friday, pausing its attempt to recover from this week's massive plunge.

Bitcoin was little changed on the day at $40,256 on the Bitstamp exchange. That is roughly 30% above its Wednesday low, but below its 200-day moving average. Rival cryptocurrency ether also came under pressure, falling 1% to $2,745.

The U.S. Treasury Department on Thursday called for new rules that would require large cryptocurrency transfers to be reported to the Internal Revenue Service and the Federal Reserve flagged the risks cryptocurrencies posed to financial stability.

Those warnings came after Chinese financial industry bodies banned the use of cryptocurrencies in payment and settlement earlier in the week.

"Nerves remained heightened, and I cannot see liquidity being deeper on Saturdays and Sundays than Monday to Friday, especially after the last week," said Jeffrey Halley, senior market analyst at OANDA.

"Weekend headline risk could prompt another bout of extended wealth destruction for the weekend warriors."

Bitcoin markets operate 24/7, setting the stage for price swings at unpredictable hours, with retail and day traders driving those moves.

The offloading in crypto world has coincided with a surge in gold, which has hit 4-1/2 month highs and is on track for three straight weeks of gains, rising 1.8% so far this week.

A narrative of bitcoin becoming "digital gold" had gained traction earlier this year, with JPMorgan saying in January that bitcoin emerged as a rival to gold.

But Societe Generale questioned the comparison on Thursday: "Bitcoin has clearly 'outshone' gold both to the upside and now also to the downside. But with such a gap in volatility and amplitude, does it make sense to compare the two assets at all?"

Ether is down 24% for the week and bitcoin down 15%.

The selloff also spilled over into equity markets on Wednesday, more so in companies with high exposure to cryptocurrencies, such as Coinbase. Coinbase is down 10% this week.

"For assets like crypto and equities the underlying common denominator is very loose central bank policies around the world and that combined with an exuberance for risk taking has filtered into crypto markets," said Edward J. Perkin, chief equity investment officer at Eaton Vance.

Graphic: Bitcoin's bounce after massive selloff - https://fingfx.thomsonreuters.com/gfx/buzz/yxmpjmwbmvr/Pasted%20image%201621588458077.png

(Reporting by Thyagaraju Adinarayan and Tom Westbrook, additional reporting by Sujata Rao; Editing by Tom Hogue, Catherine Evans and Kim Coghill)

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 46
Cxense type: free
User access status: 3
Join our Telegram channel to get our Evening Alerts and breaking news highlights

   

Next In Tech News

McDonald's creates new unit to focus on global digital app
EV maker Lucid rises in Nasdaq debut after merger with Klein-backed SPAC
Tether executives said to face criminal probe into bank fraud - Bloomberg News
Commission starts legal action against 23 EU countries over copyright rules
PayPal to research blocking transactions that fund hate groups, extremists
EU gives Google 2 months to improve hotel, flight search results
Facebook and tech giants to target attacker manifestos, far-right militias in database
Language learning app Duolingo raises price range for IPO
Bitcoin surges amid short covering, speculation over Amazon plan
China floods: ‘Digital dark age’ after disaster wreaks havoc on Internet and electricity

Stories You'll Enjoy


Vouchers