The world's most popular cryptocurrency fell more than 5% to
an almost three-week low of $28,800 early in the Asia session, before steadying
near $32,000. It has lost 11% so far this week, the biggest drop since a 12%
fall in September.
Traders said a report posted to Twitter by BitMEX Research
here suggesting that part of a bitcoin may have been spent twice was enough to
trigger selling, even if concerns were later resolved.
"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 was trading more than 20% below the record high of
$42,000 hit two weeks ago, losing ground amid growing concerns that it is one
of a number of 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 intially slipped to a
one-week low on Friday before rising 6% late in the Asia session to $1,177. -Reuters
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