Crypto mania turns on itself, sends Bitcoin tumbling

The weekend carnage came after the value of all coins surged past $2.25 trillion amid a frenzy of demand for crypto assets in the runup to Coinbase’s direct listing

The mania that drove crypto assets to records as Coinbase Global Inc. went public last week turned on itself on the weekend, sending Bitcoin tumbling the most since February.

The world’s biggest cryptocurrency slumped as much as 15% on Sunday, just days after hitting a record of $64,869. It subsequently pared some of the losses and was trading near $56,440 in Tokyo Monday.

Ether, the second-biggest token, fell as much as 18% to below $2,000 before also paring losses. The volatility buffeted Binance Coin, XRP and Cardano too. Dogecoin bucked the trend and is up 7% over 24 hours, according to CoinGecko.

The weekend carnage came after a heady period for the industry that saw the value of all coins surge past $2.25 trillion amid a frenzy of demand for crypto assets in the runup to Coinbase’s direct listing on Wednesday. The largest U.S. crypto exchange finished the week valued at $68 billion, more than the owner of the New York Stock Exchange (NYSE).

With hindsight it was inevitable, Galaxy Digital founder Michael Novogratz said in a tweet Sunday. Markets got too excited around $Coin direct listing. Basis blowing out, coins like $BSV, $XRP and $DOGE pumping. All were signs that the market got too one way.

Coinbase hangover rattles crypto assets with bitcoin in free fall. Dogecoin, which has limited use and no fundamentals, rallied last week to be worth about $50 billion at one point before stumbling Saturday. Demand was so brisk for the token that investors trying to trade it on Robinhood crashed the site a few times Friday, the online exchange said in a blog post.

There was also speculation Sunday in several online reports that the crypto plunge was related to concerns the U.S. Treasury may crack down on money laundering carried out through digital assets.

The crypto world is waking up with a bit of a sore head today, said Antoni Trenchev, co-founder of crypto lender Nexo. Dogecoin’s 100% Friday rally was ‘peak party,’ after the Bitcoin record and Coinbase listing earlier in the week. Euphoria was in the air. And usually in the crypto world, there’s a price to pay when that happens.

Besides the “unsubstantiated” report of a U.S. Treasury crackdown, Trenchev said factors for the declines may have included “excess leverage, Coinbase insiders dumping equity after the direct listing and a mass outage in China’s Xinjiang province hitting Bitcoin miners.”

Growing mainstream acceptance of cryptocurrencies has spurred Bitcoin’s rally, as well as lifting other tokens to record highs. Bitcoin’s most ardent proponents see it as a modern-day store of value and inflation hedge, while others fear a speculative bubble is building.