Bitcoin Keeps Tumbling, Billions Wiped Off Crypto Markets

View of a Bitcoin sign on a Bitcoin ATM in San Salvador, El Salvador, on June 24, 2021. Marvin Recinos/AFP via Getty Images

Bitcoin again took a tumble on Monday after a weekend rout that took out more than a fifth of the token’s value at one point in a tumultuous period that saw more than $400 billion getting wiped off crypto markets.

Currently hovering at around $48,373, Bitcoin futures are back where they were during early October. The digital currency had hit $69,000—an all-time high after a surge in November. Traders claimed the recent decline was the result of investors moving funds away from riskier assets into more traditional bets after news of the Omicron variant of the CCP (Chinese Communist Party) virus as well as the Fed’s impending tightening of the monetary policy.

The latest variant has now been discovered in around 38 countries, with almost a third of U.S. states reporting the virus. In some cases, fully vaccinated individuals have been infected with the highly transmissible, but reportedly mild variant. While no deaths have been reported, travel restrictions have been enforced on flights coming in from southern African countries by the United States, European Union, and a number of other countries.

Bitcoin fell to a low point of $42,000 on Saturday and was trading around $50,000 for the majority of Sunday.

“Our expectation is the rest of Q4 will be a hard month; we aren’t seeing the strength in bitcoin that we generally see after one of these crushing days,” Matt Dibb at Stackfunds, a crypto fund distributor, said to Reuters.

The number of futures contracts held by crypto investors across all exchanges is currently at $16.5 billion according to Coinglass, a data analytics platform. It has come down from $23.5 billion on Thursday, and from $27 billion on Nov. 10, when Bitcoin hit its highest level.

The fall in price has been attributed to lower trading volumes on weekends, especially institutions that only trade on weekdays. Besides this, executives from eight major cryptocurrency firms will testify before the U.S. House Financial Services Committee on Dec. 8, suggesting initial steps toward regulation on the highly volatile industry.

Coinglass reported that retail cryptocurrency exchanges closed almost $2 billion long positions on Saturday when prices crossed a certain limit, $850 million of which were from bitcoin futures, based on data from Sean Farrell, head of digital asset strategy at Fundstrat, reported Business Insider.

Sudden liquidations are done as some exchanges allow Bitcoin to bet 20 times its value; a decrease, thereby, initiates immediate closure as losses cross the invested amount. Ether and other cryptocurrencies were also affected by the mass sell-off.

Ether was trading as low as $3,570 before rebounding to above $4,000 levels on Monday, according to data from Coinbase.