Bitcoin rises above $57,000 after a weekend washout stripped 17% off its price in its biggest drop since February
Bitcoin rose 2% to above $57,600 on Monday regaining some stability after having fallen by as much as 17% over the weekend, marking its biggest daily drop since February.
The digital asset hit an all-time high of over $64,000 only last week.
The weekend crash followed a buying frenzy linked to Coinbase’s direct listing and expectations of tighter regulations around the sector, as more investors enter the cryptocurrency space.
Excitement over Coinbase’s market debut pushed bitcoin to a new record high, Milan Cutkovic, market analyst at Axi, said. “The euphoria did not last for too long though, as more investors started to question if the rally went too far in the short-term, and decided to cash in.”
“However, bitcoin is likely to see a speedy recovery from its recent slump. Unlike 2017/18, there are far more institutional investors looking to jump into bitcoin,” he said.
That sentiment was echoed by crypto bull Mike Novogratz, who tweeted on Sunday: “With hindsight it was inevitable. Markets got too excited around $Coin direct listing. Basis blowing out, coins like $BSV, $XRP and $DOGE pumping. All were signs that the market got too one-way. We will be fine in the medium term as institutions coming to the space.”
Speculation over tighter regulations seem to have further fueled any sell-offs.
“It’s difficult to work out exactly why the sudden reversal occurred, but the online chatter is linking it to speculation that the US Treasury may soon crackdown on money laundering that uses digital assets,” Deutsche Bank strategists wrote.
A popular Twitter account FXHedge reported the Treasury’s potential move via a tweet on Sunday. Minutes later, crypto markets dipped into red territory, with Ethereum’s ether falling 18%. Binance Coin, Ripple’s XRP, and Cardano all lost more than 12%. But the same account attributed bitcoin’s crash to a sell-off of 9,000 coins by a Chinese crypto whale on the Binance exchange.
Willy Woo, an on-chain bitcoin analyst, said the initial drop may have been caused by a power outage in the Chinese region of Xinjiang, home to the majority of the country’s bitcoin mining capacity.
But bitcoin is still up 90% so far this year and more than 800% in the last 12 months. Coming to price outlook, longtime bitcoin bull Max Keiser has raised his short-term target after an “extremely healthy correction” to $98,000, and said his 2021 target for the cryptocurrency stands at $220,000.