Major cryptocurrencies were down on Friday morning with bitcoin plunging almost 5%, its worst weekly performance since May.
Bitcoin (BTC-USD) was trading at $56,853 (£42,338) at the time of writing, dipping below below $57,000 for the first time since October. Technical indicators show it could be heading for further losses. Ethereum (ETH-USD), the second biggest crypto by market cap, was down 1.5% to trade at $4,145.
And solana (SOL1-USD), a crypto that many think could beat ethereum to become the world’s pre-eminent network for decentralised finance, was down 2.3% to trade at $204.
Earlier this month bitcoin hit its all-time high, crossing $68,000. It's also up over 93% so far this year.
“Investors are waiting on the sidelines for bitcoin to finish correction after getting hit by significant profit-taking following a strong rally to a new record and the total crypto market cap topping $3 trillion” said Wael Makarem, senior market strategist at Exness.
“We are used to such pullbacks in cryptos, and we already know that they are highly volatile, where any positive headlines could drive a strong rebound to the top.”
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According to Luno’s UK manager, Sam Kopelman, the tide turned for bitcoin when the US Securities and Exchange Commission (SEC) rejected a spot bitcoin exchange-traded fund (ETF) by investment firm VanEck last week — one that invests directly in bitcoin rather than the futures contracts. The SEC said it was worried about fraudulent trading and a lack of protection for investors.
VanEck’s bitcoin futures ETF started trading on the Chicago-based CBOE exchange this week, but according to CoinDesk, "the first-day reception looked chilly compared to launches of similar funds last month."
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Meanwhile Kopelman said market sentiment has also turned sour after Twitter’s (TWTR) chief financial officer ruled out a crypto investment for the social media giant.
Ned Segal said in an interview that investing in crypto "doesn't make sense right now" due to extreme market volatility and the industry's lack of accounting rules.
He said in order for Twitter to invest in crypto companies, it would have to change its current investment policies, which currently only permit the company to hold assets that are more stable.
Earlier, Naeem Aslam, chief market analyst at Ava Trade, had warned that “odds are stacking in favour of the further move to the downside” for cryptos.
“We have a lack of evidence in terms of bitcoin’s price action that upward momentum is springing back to life. The fear is that we may see an intense sell-off if bitcoin violates the $58K support level.”