Bitcoin plunge wipes US$500b from value in crypto rout

[LONDON] The crypto bubble that inflated Bitcoin's value past US$1 trillion and added billions to nonsense digital tokens overnight is bursting.

Bitcoin plunged almost 22 per cent to US$35,000, wiping out more than US$500 billion in value from the coin's peak market value. It has erased all the gains it clocked up following Tesla's Feb 8 announcement that it would use corporate cash to buy the asset and accept it as a form of payment for its vehicles. Ethereum, the second-biggest coin, sank more tha 40 per cent, while joke token Dogecoin lost 45 per cent.

Bitcoin is now down more than 50 per cent from its record of almost US$65,000 set in April. Fueling the volatility is Tesla CEO Elon Musk, whose social-media utterances have whipsawed the crypto community. A statement from the People's Bank of China on Tuesday reiterating that digital tokens can't be used as a form of payment added to the selloff.

The selloff dominated market chatter on a day when equities also were tumbling and the Federal Reserve was set to release minutes from its latest meeting. #Cryptotrading was trending on Twitter, where critics and fans alike were in a tither over the rout. Critics had warned for weeks that the moves in crypto assets were unsustainable and that any sign of a selloff would lead to a rout.

"This is going to be the first 'welcome to crypto' day for a lot of new entrants," said Stephane Ouellette, chief executive and co-founder of FRNT Financial. "The history of these assets has been littered with aggressive rallies and sickening selloffs." Chart-watchers pointed to key technical levels that have failed.

"From a technical standpoint, the indicators are flashing red," said Ipek Ozkardeskaya, senior analyst at Swissquote in Gland, Switzerland. "The next important support level stands near US$37,000, then the US$30,000 mark. There is a chance that we see a pullback to these levels and even below, at least in the short run."

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