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A flurry of selling briefly pushed Bitcoin to its biggest intraday drop in more than two weeks. While the largest cryptocurrency recouped some of its losses, it ended lower for its first drop in four days.
Bitcoin fell 3.5 per cent to US$55,360 as of 5 p.m. in New York on Tuesday after earlier slumping to as low as about US$54,000. Even with the drop, the largest cryptocurrency by market value is up more than 90 per cent year to date and remains within sight of its all-time high of about US$65,000 reached in April. For the month alone, Bitcoin has climbed more than 25 per cent.
Optimism that the first U.S. exchange-traded funds based on Bitcoin futures may be approved by the Securities and Exchange Commission as soon as this month has helped offset looming concern over potential moves by regulators to tighten oversight of the cryptocurrency market. Tuesday’s decline doesn’t change that positive dynamic, said James Butterfill, a U.K.-based investment strategist at CoinShares.
The drop “is not cause for concern,” Butterfill said. “It hasn’t broken trend and the fundamentals of increase chances of a SEC approval and increasing institutional adoption are likely to be supportive of price in the coming weeks.”
Bitcoin approached US$58,000 early Tuesday in Asian trading before pulling back in U.S. hours, edging lower throughout the day.
“We believe the market is healthy and these are in fact normal pullbacks that are to be expected,” said Philippe Bekhazi, co-founder and Chief Executive Officer of XBTO, a cryptocurrency trading and investment firm. “The market is seemingly pricing in the probability of an ETF approval this month. So profit-taking is natural.”