All the major cryptocurrencies lost value on Wednesday, although Shiba Inu Coin is continuing its rapid growth
Bitcoin has crashed back below $60,000 (£43,700) after taking a sharp dip on Wednesday morning.
The world’s largest cryptocurrency is now worth around $58,800 (£42,800), having hit a record high of almost $67,000 (£48,500) last week.
Other coins have also been affected. Ethereum fell from a record price of $4,300 (£3,100) – reached this morning – back down to $4,000 (£2,900).
Dogecoin also fell, dropping from $0.26 (£0.19) to $0.23 (£0.17) – a loss of more than 10 per cent.
However, it was better news for the meme currency Shiba Inu Coin, which has been booming of late.
The dog-based crypto coin has soared by a further 37 per cent, and is now worth $0.000064 (£0.000047) – almost treble what it was just three weeks ago.
While Wednesday’s crash was not major compared to many that have come before, it still wiped hundreds of billions of dollars from the cryptocurrency market.
Blockchain data suggests it could have been due to people selling their assets, which often happens when Bitcoin and other cryptocurrencies reach record highs.
Ki Young Ju, CEO of data analytics firm CryptoQuant, told CoinDesk : “Estimated leverage ratio is about to hit a year-high. It seems obvious that the market is over-leveraged now.
“We’ll see some volatility with huge liquidations shortly.”
Analysts have suggested the dog-based coins peaking sometimes signals a downturn for the wider crypto market.
Delphi Digital analysts said in a note published on Monday: “Dog coins are mooning again, which has historically been a pretty good indication of an overheated market.
“The first time dog coins went wild was April-May this year, and quickly cratered as crypto markets cooled off. In early September, dog coins were all the rage again and the broader crypto market saw a fairly deep de-leveraging.”
However, Freddie Evans, a sales trader at the UK based digital asset broker GlobalBloc, said many traders are taking this opportunity to buy the dip.
He told The Independent : “The markets have taken a tumble this morning after bitcoin broke the $60,000 support. Investors have been on edge expecting a correction as the markets have looked over leveraged.
“The drop has been predicted by many analysts and provides an opportunity to those looking to buy the dip, meaning it could be that this re-tracement is short lived and we head back above $60,000 before too long. Almost all coins are down over the last 24 hours, but we’ve seen more buyers than sellers in this morning’s session so far.”
Jonathan Cheesman, head of institutional sales at crypto-derivatives exchange FTX, told Bloomburg of Shiba Inu Coin’s rise:
“Memes have value and have been an investible thesis in 2021. Lower dollar-price tokens are attractive to retail.”
The market has also been buoyed by rumours it may soon be added to the popular trading platform Robinhood.
Some investors find coins like Shiba Inu attractive, as they offer the opportunity for quick gains. However, you can also lose all your money in little more than an instant.
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