Bitcoin’s slide eased on Wednesday, offering some respite to holders of the volatile crypto-currency after a flash crash wiped billions of dollars off its value the day before.
The largest crypto-currency by market value was down slightly by 1 percent from its Tuesday level as of 5 p.m. Eastern time to trade at about $46,287.82, according to CoinDesk. It briefly fell 17% over the course of a few minutes Tuesday and ended the day down about 10%. Other digital assets also lost steam: Ether, the second-largest, slipped 2.6% and was flat on Wednesday.
There was no single catalyst to precipitate the recent pullback. The 70 percent rise in bitcoin’s value since late July, combined with euphoria over El Salvador’s adoption of bitcoin as its national currency as of Tuesday, may have prompted traders to take profits, analysts said. Investors have also stepped up their bets on other crypto-currencies in recent months, giving a boost to the Ethereum and Cardano blockchains and driving up prices for non-fungible tokens.
Bitcoin and rival digital assets are also notoriously volatile, with prices often swinging wildly based on rumors, tweets from influencers or a change in sentiment among groups of traders gathering on social media to make speculative bets.
In the latest bout of volatility, bitcoin has lost nearly $93 billion in market value since Sunday. Other crypto-currencies have also been hit: Ether lost $61 billion, and Cardano’s Ada lost $13 billion.
“Profit-taking was very much expected,” said Naeem Aslam, London-based chief market analyst at broker AvaTrade. “From our perspective, it’s a very healthy pullback.”
A host of factors could dampen optimism and stand in the way of a further rise in bitcoin. Coinbase Global Inc. said Wednesday that the Securities and Exchange Commission threatened to sue the crypto-currency exchange if it launched a program that allows users to earn interest by lending crypto-currencies. Coinbase shares fell 3.3 percent in pre-market trading.
Problems in the rollout of El Salvador’s unprecedented adoption of bitcoin as its national currency could also dampen expectations for some traders. The Central American country’s president, Nayib Bukele, said early Wednesday that the government’s bitcoin e-wallet would be taken offline between 1 a.m. and 6 a.m. local time to make improvements and resolve problems reported by users.
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Analysts say the friction between the growing adoption of crypto-currencies around the world on the one hand, and the increased focus on the market by regulators on the other, could lead to greater volatility in digital assets.
