Bitcoin and ethereum prices hammered in steep selloffs

Bitcoin and ethereum, the two largest cryptocurrencies in the world, slammed the breaks on their record-setting sprees early this week.

  • A stark warning in the UK and rising US bond yields dented price rallies of cryptocurrencies
  • Bitcoin (BTC) price tanked on Sunday and Monday after hitting US$42,000 last week
  • Meanwhile, Ether (ETH) price suffered its biggest one-day percentage loss in 10 months

Is the crypto bubble bursting?

Concern is brewing in the market that the cryptocurrency bubble looks set to pop, after plunges in the prices of bitcoin (BTC) and ether (ETH).

That followed the UK’s financial watchdog’s warning on Monday, that consumers investing in cryptocurrency ‘should be prepared to lose all their money’ given the high risks, price volatility, the products’ complexity, and a lack of regulation to protect consumers.

Rising US bond yields also lifted the US dollar broadly and hurt bitcoin, which was one of the popular bets against the dollar, Reuters reported.

Bitcoin tumbles from US$42,000 high

BTC, the world’s most popular and biggest cryptocurrency, started the week with a sharp correction. Its price sank as much as 21% over Sunday and Monday - its deepest two-day plunge since March 2020.

The token clawed back some losses in Asian trading on Tuesday (12 January), though BTC was still down 5.9% on the day to US$35,367 at around 09:15 SGT.

Vijay Ayyar, crypto exchange Luno’s head of business development, said on Monday that the parabola break might indicate the start of a larger price correction for bitcoin.

Some investors worry that BTC’s recent surges are defying logic, fuelled just by massive economic stimulus.

BTC’s price hit a new all-time high of US$42,000 last Friday (08 January). The same day, Bank of America strategists said ‘violent’ inflationary price action in markets helped BTC’s rally in the past two months, but warned that the cryptocurrency ‘blows the doors off prior bubbles’ such as the 1990s dot-com bubble.

Ethereum price plunges 23%

Meanwhile, smaller coin ethereum plummeted as much as 23% on Monday to a one-week low of US$985. That marked its worst one-day percentage drop since March 2020.

The altcoin’s price tends to move in tandem with bitcoin. At 09:17 SGT on Tuesday, ETH recovered slightly to trade at US$1,082, which was still a 11.5% drop from the previous day.

ETH is the cryptocurrency that flows within the ethereum network, and is typically used to pay transaction fees. Ethereum is an open software platform built on blockchain technology for decentralised applications.

Despite its sharp correction at the start of this week, ETH is still up by about 45% in 2021 to date, compared to around US$746 as at end-2020.

Last year, ETH recorded an eye-popping 600% price gain. It is the second-most traded cryptocurrency in the world.

How to trade cryptocurrencies with IG

Are you feeling bullish or bearish on BTC and ETH?

Either way you can buy (long) or sell (short) the asset using derivatives like CFDs offered on IG's industry-leading trading platform in a few easy steps:

  1. Create a live or demo IG Trading Account, or log in to your existing account
  2. Enter <Bitcoin (USD)> or <Ether (USD)> in the search bar and select the instrument
  3. Choose your position size
  4. Click on ‘buy’ or ‘sell’ in the deal ticket
  5. Confirm the trade

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

Please see important Research Disclaimer.

Cryptocurrency trading

Trade CFDs on cryptocurrencies with IG.

  • No need to own any cryptocurrency
  • Trade on bitcoin, ether, litecoin, EOS, NEO and Stellar pairs
  • Trade on markets that are both rising and falling

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
liveprices.javascriptrequired
liveprices.javascriptrequired

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

liveprices.javascriptrequired

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.