RIYADH: Bitcoin and ether, the world's two largest cryptocurrencies, were weak on Wednesday and at near-critical levels that analysts believe could spell further weakness if they fell further.
While profit-taking after the massive run-up in prices earlier this month emerged as the biggest factor, analysts pointed to other reasons behind the more cautious sentiment, such as bitcoin's blockchain upgrade last weekend, higher US inflation and China's latest directive to its state-owned firms not to carry out cryptocurrency mining.
Bitcoin has doubled in value since January. "Its correction could get severe if it fell through $58,000," Craig Erlam, a senior market analyst at online broker Oanda, said.
"This has the feel that we could see some messy two-way action, and it wouldn’t surprise to see 68,000 capping the upside, 57,000 the downside," added Chris Weston, head of research at brokerage Pepperstone in Melbourne.
In another sign of the world's growing fascination with blockchain and cryptocurrencies, the Staples Center sports and entertainment arena in downtown Los Angeles said it will be renamed Crypto.com Arena under a naming rights agreement with the Singapore-based Crypto.com platform.
"Still, the drop may signal the start of more downside and the longer we stay at the current price level the bigger the possibility of an even greater pullback. Investors should be on the watch for any negative macro news that may cause the markets to lose confidence in uptrend continuation and ignite a bigger correction,” Mikkel Morch, Executive Director & Risk Management at crypto and digital assets hedge fund ARK36 said.
He added: "If the $59K support is breached, Bitcoin may drop all the way to $49K where another strong support area is found."
Meanwhile, Ruud Feltkamp, CEO of cloud-based automated crypto trading bot Cryptohopper said: “As previously predicted, we will see this kind of volatility, with cryptocurrency going up and down, in the coming months. But this presents exciting trading opportunities. You can pretty quickly see where the price will bounce and, when this happens, the price jumps quite a bit. For me, as a trader, this makes crypto the most fun market to trade in."
Another ETF for Bitcoin Futures
A third US bitcoin futures exchange-traded fund has entered the market, Bloomberg reported.
The VanEck Bitcoin Strategy ETF (ticker XBTF) launched Tuesday, roughly one month after the ProShares Bitcoin Strategy fund (BITO) became the first of its kind to start trading and debuted to record-setting demand.
While the ProShares fund sucked in $1.1 billion in just two days — the fastest that the ETF has ever done — that pace of growth has slowed considerably.
Assets have lingered between $1.3 billion and $1.4 billion for the past several weeks, according to Bloomberg.
Meanwhile, the second fund of its kind, Valkyrie's Bitcoin Strategy ETF (BTF), raised just $60 million despite launching three days after ProShares.
Daily Trading
Bitcoin, the leading cryptocurrency in trading internationally, traded lower on Wednesday, falling by 1.08 percent to $60,206 at 5:24 pm Riyadh time.
ether, the second most traded cryptocurrency, traded at $4,221, down by 2.40 percent, according to data from Coindesk.
