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Bitcoin on Friday fell to its lowest level in more than three weeks, dipping below $22,000 amid a sudden crypto sell-off in early European trading.
Bitcoin plunged from $22,738 to below $21,352.13 at 2:13 p.m. ET, according to CoinDesk data. Earlier in the morning, the cryptocurrency fluctuated between $21,500 and $22,000.
It comes shortly after the world’s largest digital coin surpassed the $25,000 level for the first time since June following a rise in U.S. stocks.
Ether fell from $1,808 to $1,728 at the same time before staging a muted rebound. It had slipped again, falling further to $1,695.90 by 2:13 p.m. ET.
“It’s not showing the pattern of a flash crash, as the assets didn’t immediately rebound sharply but sank even lower in the hours that followed,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown. “It seems likely that is was as a result of a large sale transaction, in the absence of other more external factors.”
Streeter said it appeared Cardano made the first plunge downwards, followed by Bitcoin and Ether and then smaller coins like Dogecoin.
“This fresh chill has descended amid fears that the market is heading for a crypto winter,” she added. “Although at $21,800 Bitcoin is still some way off its June lows of under $19,000, volatility is once again wracking the market.”
The digital coins may also be following equities lower.
“US equity markets have pulled back since Wednesday’s release of the July Fed meeting minutes, the key takeaway being that the Fed likely won’t be finished with rate hikes until inflation is tamed across the board, with no guidance offered on future rate increases either,” Simon Peters, crypto market analyst at eToro, told CNBC.
“With the tight correlation between US equities and crypto in recent months I suspect this has filtered through to crypto markets and it’s why we are seeing the sell-off. The trend has also perhaps been exacerbated by liquidation of long positions on bitcoin perpetual futures markets.”
Citing Coinglass data, Peters said Friday had been the biggest liquidation of long positions on futures since June 18, also the date bitcoin reached its lowest price of the year around $17,500.
Bitcoin and ether ended Thursday in the red, but ether has surged more than 100% since mid-June as investors prepare for a massive upgrade to the ethereum network.