Bitcoin Finds Some Wary Asian Respite After Brutal Crypto Selloff
- Bitcoin and other major cryptocurrencies have bounced a little early in Asia
- It, Ethereum and Ripple all suffered major falls on Tuesday
- Fears of more regulation and, perhaps, outright trading bans seem to be behind current fear
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Major cryptocurrencies like Bitcoin and Ethereum seem to have found some fragile respite in Asia Wednesday after huge falls in the previous session.
Bitcoin briefly dropped below the $10,000 mark Tuesday, slipping under the psychologically important level it topped for the first time last November.
Other major digital currencies also sold off, with Ethereum sliding 30% at one point. Number three player Ripple slid nearly 50% to near 90cents before recovering back above the $1 mark.
The falls followed comments from South Korean regulators that suggested tougher regulation on digital currency trading, and a report Tuesday from Reuters citing Chinese government sources suggesting that cryptocurrency trading should be banned. The banning of South Korean Bitcoin prices from the influential Coinmarketcap.com website a few days ago was behind a previous crypto wobble. Prices tended to trade at a premium in that country thanks to very high demand.
Bitcoin’s price has now fallen by nearly 50% since it topped at $19,800 in December. But the cryptocurrency giant remains more than 1,000 higher over the last twelve months.
However, the asset class’s propensity for enormous daily price swings does cast some doubt over its purpose beyond that of an extraordinary trading vehicle. The two tests often applied to traditional currencies- that of stability and use as a long-term store of value are very difficult to apply to cryptocurrencies under current market conditions.
Bitcoin has bounced at the $9933 level on its hourly chart in Asian trade on Wednesday, rising back as far as $11,400 at the time of writing (1150 GMT Tuesday)
However, sentiment toward the cryptocurrency leader may warn of further declines ahead, according to DailyFX Quantitative Strategist David Rodriguez. He points out that the huge number of investors now long of this market may very well be a strong contrarian indicator and warning of further declines.
--- Written by David Cottle, DailyFX Research
Contact and follow David on Twitter:@DavidCottleFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.