Bitcoin, Cryptocurrencies Wracked By Fresh Volatility

Cryptocurrencies plunged abruptly at the end of last week, taking Bitcoin to a three-week low, their biggest drop since a 15 percent sell-off in mid-June, in the latest signs of turbulence for digital assets.

Bitcoin fell as much as 7.7 percent to $21,404 (£18,100) within a few minutes at around 6:40 a.m. GMT in early European trading on Friday, before recovering slightly and then continuing to fall.

Ether and other cryptocurrencies also fell.

Bitcoin, the biggest digital coin, had recently surpassed the $25,000 level for the first time since June amidst a rise in US stocks.

Sell-off

Industry watchers said the reasons for the sudden plunge were not immediately clear.

“It’s not showing the pattern of a flash crash, as the assets didn’t immediately rebound sharply but sank even lower in the hours that followed,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, in a research note.

She said that in the absence of obvious external factors it was likely a large sale transaction had spurred the movement.

She said the first coin to plunge was Cardano, followed by Bitcoin and Ether, then smaller coins such as Dogecoin.

Volatility

“This fresh chill has descended amid fears that the market is heading for a crypto winter,” Streeter added. “Although at $21,800 Bitcoin is still some way off its June lows of under $19,000, volatility is once again wracking the market.”

Bitcoin dropped more than 37 percent during the month of June as investors reacted to the collapse of so-called stablecoin TerraUSD in May and major crypto lender Celsius freezing customer withdrawals.

Celsius filed for bankruptcy protection in July.

“Speculating in cryptocurrencies is extremely high risk and is not suitable for the vast majority of people,” Streeter said.