Bitcoin tumbled almost 5 per cent on Monday as the start of the week offered little respite following the crypto crash over the weekend.
Bitcoin tumbled almost 5 per cent on Monday as the start of the week offered little respite following the crypto crash this weekend, where at one point Bitcoin lost over a fifth of its value and its market dominance dipped close to its lowest ever.
Bitcoin tumbled more than 17 per cent on Friday night and into Saturday due to a period of selling as investors fled risky areas of the market amid fears over what the new Omicron variant means for the economic recovery.
The rout sent Bitcoin's price and the amount invested in Bitcoin futures back to where they were in early October, before a massive price surge that sent the token to an all-time high of $69,000 (€61,000) on November 10.
At the time of publication, it was down 3.9 per cent at $47,567 (around €42,000).
Why is there a Bitcoin bloodbath?
Some 372,000 crypto accounts were liquidated in the past 24 hours totaling $2.3 billion (€2.4 billion).
"Our expectation is the rest of Q4 will be a hard month; we aren't seeing the strength in Bitcoin that we generally see after one of these crushing days," said Matt Dibb at Stackfunds, a Singapore-based crypto fund distributor.
Traders said the weekend fall was connected to a broad move away from riskier assets in traditional markets over worries about the Omicron variant of the coronavirus, combined with lower trading liquidity that tends to plague cryptocurrencies at weekends.
"There's barely any liquidity on weekends so markets are slightly more vulnerable to shocks - that and a lot of demand coming from institutions, and they're not trading over the weekend," said Joseph Edwards, head of research at crypto brokerage Enigma Securities in London.
What happened over the weekend?
Over the weekend, as prices fell, investors who had bought Bitcoin on margin saw exchanges close their positions, causing a cascade of selling.
Some exchanges allow traders to place bets 20 times or more the size of their investment, meaning a small move in the wrong direction can cause exchanges to liquidate clients' positions when their initial investment is gone.
Ben Caselin at Asia-based crypto exchange AAX said liquidity had become thin because Bitcoin moved off exchanges to offline digital wallets.
Ether not hit as hard
Ether, the world's second-largest cryptocurrency, was also hit on Saturday, albeit less hard. It tumbled 5.5 per cent on Monday.
On Sunday, one Ether rose to as high as 0.086 Bitcoin, its highest since May 2018.
On Monday, CME Group Inc will launch Ether mini futures, which they hope will let traders better manage the risk of trading the coin.