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Bitcoin faltered on Friday and was headed for its sharpest weekly drop since September, as concerns about regulation and its rapid recovery have led to a setback from recent records.
The world’s most popular cryptocurrency fell more than 5% to an almost three-week low of $ 28,800 at the start of the Asian session, before stabilizing near $ 32,000. It has lost 11% so far this week, the biggest drop since a 12% drop in September.
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Traders said a report posted on Twitter by BitMEX Research suggesting that part of a bitcoin may have been spent twice was enough to trigger the sale, even if concerns were resolved later.
“You wouldn’t want to rationalize too much in a market that is as inefficient and immature as bitcoin, but there is certainly a reversal in momentum,” said Kyle Rodda, an analyst at IG Markets in Melbourne, after the BitMEX report.
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“The herd probably looked at it and thought it looked scary and shocking and now is the time to sell.”
Bitcoin was trading more than 20% below the $ 42,000 record set two weeks ago, losing ground amid growing concerns that it is one of several price bubbles and as cryptocurrencies draw the attention of regulators.
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During a hearing in the U.S. Senate on Tuesday, Janet Yellen, President Joe Biden’s choice to head the U.S. Treasury, expressed concern that cryptocurrencies could be used to finance illegal activities.
This followed a call last week by European Central Bank President Christine Lagarde for global bitcoin regulation.
Still, some said the pullback comes with the territory for an asset that is about 700% above the 2020 low of $ 3,850 reached in March.
“It’s a highly volatile piece,” said Michael McCarthy, a strategist at brokerage CMC Markets in Sydney. “He has made extraordinary gains and is doing what bitcoin does and fluctuating.”
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The second largest cryptocurrency ethereum initially fell to a week low on Friday, before rising 6% at the end of the Asian session to $ 1,177.
(Reporting by Tom Westbrook; editing by Leslie Adler and Simon Cameron-Moore)