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Business

Bitcoin, Dogecoin plummet as cryptocurrency rally falters

By
Noah Manskar
Published Feb. 23, 2021
Updated Feb. 23, 2021, 10:02 a.m. ET

Major cryptocurrencies plunged early Tuesday as investors took some steam out of a rally that’s driven the digital assets to staggering prices.

The price of bitcoin tumbled 8.5 percent to $47,373.99 after falling as low as $44,964.49 overnight, CoinDesk data show, marking its largest daily decline in a month.

Dogecoin, the meme-inspired cryptocurrency that’s become an online cult favorite, recently plummeted nearly 12 percent to roughly 4.6 cents. And Ether, second only to bitcoin in terms of market value, sank 9.8 percent to $1,532.67 as of 9:40 a.m.

The selloff sent the cryptocurrency market’s total value down about 4 percent to nearly $1.5 trillion just days after it soared to all-time records, according to Coinmarketcap.com.

“Bitcoin’s price increases had started looking exponential recently, driven by speculative mania,” OANDA senior market analyst Jeffrey Halley told The Post. “As is the nature of such moves, an exponential move higher is often accompanied by an equally ugly correction lower as the herd simultaneously runs for the exit door at once.”

Representation of the virtual currency Bitcoin is seen on a motherboard in this picture illustration
The sell-off sent the cryptocurrency market’s total value down about 16 percent. Dado Ruvic/Reuters

Tesla CEO Elon Musk — one of crypto’s most prominent backers — appeared to kickstart the plunge over the weekend with a tweet declaring that the prices of bitcoin and Ether “seem high” even though his electric-car maker has invested $1.5 billion in the former coin.

The markets were also spooked by skeptical comments on Monday from Treasury Secretary Janet Yellen, who called bitcoin “extremely inefficient” and “highly speculative.”

“People should beware it can be extremely volatile and I do worry about potential losses that investors could suffer,” Yellen reportedly said at a conference.

More signs of turbulence emerged Tuesday. New York Attorney General Letitia James forced Tether — a so-called stablecoin that was reportedly tied to the US dollar — to stop trading with state residents after alleging that the companies behind it hid about $850 million in losses.

And Binance, the world’s largest cryptocurrency exchange, had to halt withdrawals of Ether for more than an hour because of “high network congestion.”

Tuesday’s tumble underscored the volatility in cryptocurrencies just a week after bitcoin surged above $50,000 for the first time.

Crypto prices have surged in recent months as a growing number of institutional investors and major companies such as Tesla and Mastercard started treating the digital coins like more mainstream investment assets.

But skeptics have argued that these kinds of wild price swings could be an obstacle to cryptocurrency’s popularity among investors.

“While high volatility is far from unusual in cryptocurrencies, it could slow Bitcoin from becoming mainstream,” Axi market analyst Milan Cukovic said.

With Post Wires