Bitcoin, dogecoin and other cryptocurrencies plunged in value on Wednesday as investors soured on the speculative bets that have soared in popularity this year.
Bitcoin’s price tumbled as much as 30% since 3 p.m. ET Tuesday, dropping to as low as $30,201.96, its weakest since January, according to CoinDesk. Dogecoin declined 31% to 33 U.S. cents on Wednesday, after earlier plunging as low as about 22 cents. Ether fell 28% to $2,376.66 apiece.
The rapid drop led to billions of dollars of bullish, leveraged bets being wiped out on offshore cryptocurrency derivatives exchanges.
“Many people have been tempted to invest purely because it has gone up in value and they have a fear of missing out,” said Rick Eling, investment director at wealth management firm Quilter. “Bitcoin is a volatile asset, and as we have seen so often in financial markets, boom is almost always followed by bust.”
As of Wednesday morning Eastern time, more than $8.4 billion of liquidations of leveraged bets had taken place during the past 24 hours, including one trader on Huobi, a popular offshore exchange, who lost $67 million in a single liquidation, according to data provider Bybt. The majority of recent liquidations have been from long positions, in which traders bet on an increase in the price of bitcoin or some other cryptocurrency, Bybt data shows.
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Source: Wall Street Journal