Bitcoin drops below US$7,000 as other digital currencies fall sharply
The world's largest cryptocurrency by market value fell as low as US$6,870, according to data from industry website CoinDesk
Bitcoin dropped below US$7,000 on Wednesday as the price of several major digital currencies fell.
The world's largest cryptocurrency by market value fell as low as US$6,870, according to data from industry website CoinDesk, which tracks the price across a number of exchanges.
Mati Greenspan, senior market analyst at eToro, said the move was less correlated to recent fears of a global trade war and more associated with traders evaluating the assets in their portfolio and trying to assign value to them.
“I think that there is a big connection in the way that people are managing their portfolios, and the cryptocurrencies have been increasingly correlated with the stock markets, especially in the last few weeks,” he told CNBC in a phone interview.
“This (comes) as more and more brokers add bitcoin, the liquidity bridges are being built.”
Ethereum and ripple, the second- and third-largest cryptocurrencies by market capitalisation respectively, both saw sharp drops on Wednesday. Ethereum fell more than 7 per cent to US$384 while ripple fell more than 9 per cent to 51 cents.
Trade war fears
China announced new tariffs on 106 US products on Wednesday, a move that has shaken investors and further ignited fears of a trade war.
Cryptocurrencies like bitcoin, which are decentralised and not backed by governments, are extremely volatile assets.
Charles Hayter, chief executive of CryptoCompare, said people were likely fleeing to safer investments as protectionism concerns took hold.
“In the grand scheme of things, cryptos lie on [the] extremely risky end of the spectrum and are for times of hot money,” Hayter told CNBC in an email.
“The hint of a trade war puts a bit of fear into the mix and as we all know markets correlate in various periods depending on the exogenous factors.”
Bitcoin suffered its worst ever start to the year this year, dropping 48 per cent over the first quarter. The cryptocurrency hit an all-time high near US$20,000 in December.