Bitcoin tumbles 7.2%, leads crypto currency losses

Smaller tokens such as Solana, Cardano, Polkadot and Dogecoin also lost ground, according to tracker CoinGecko

Bitcoin extended losses, deepening its December decline and breaching key technical levels.

The token dropped 7.2% overnight to trade at $47,321, which is below its 200-day moving average. Ether, the second-largest coin, was also in the red, falling nearly 7%. Smaller tokens such as Solana, Cardano, Polkadot and meme token Dogecoin also lost ground, according to tracker CoinGecko.

The plunge likely accelerated as more than 165,000 traders had their accounts liquidated over the past 24 hours, equal to around $524 million worth of digital assets, according to data from crypto trading platform Coinglass.

Matt Maley, chief market strategist for Miller Tabak + Co., said it’s strange to see cryptocurrencies selling off into year-end because many have been big winners in 2021 despite recent bouts of turbulence. But institutional investors might be behind this week’s declines.

If these investors got to the party late, ‘their gains in cryptos are not as large -- in fact, some of them probably have losses,’ Maley said. ‘Therefore, they might be paring back their holdings a bit and adding to their exposure’ elsewhere, such as equities.

Bitcoin has largely moved in tandem with riskier assets like US stocks this year, though that pattern looks to be breaking down this month. The S&P 500 index of the largest companies is up nearly 5% so far in December, while Bitcoin has lost some 16% for its worst monthly performance since May. This is the first month since June that their performances have diverged.

Each new round of volatility seems to support an idea that the asset class is highly speculative, said Mike Bailey, director of research at FBB Capital Partners.

Technical studies suggest something of a tipping point for Bitcoin following a retreat from an all-time high of nearly $69,000 in November, which has trimmed its year-to-date (YTD) advance to nearly 70% from more than 100% at the peak.