Markets Live, Wednesday, 17 November 2021

Cryptocurrencies fell on Tuesday, with Bitcoin briefly dipping below $US60,000 and Ether touching its lowest level this month, in a broad-based retreat from recent record highs.

The largest digital token whipsawed traders, dipping as much as 8.2 per cent before cutting the decline by around half. The slide to $US58,661 was the biggest intraday drop since September 24. Second-ranked Ether tumbled more than 10 per cent before also paring losses. Global crypto market cap has dropped some 10 per cent in the past 24 hours to $US2.7 trillion, according tracker CoinGecko.

“After several days of gains, which saw Bitcoin hover near its all-time high as many other altcoins managed to reach new highs, we are seeing a significant pullback,” said Walid Koudmani, an analyst at XTB Market. “The extreme volatility that the market is prone to could lead to a potential domino effect if more negative news were to emerge and take prices to new lows.”

Crypto-centric stocks also took a hit, with shares of Coinbase Global Inc., a crypto exchange, falling roughly 4 per cent at one point. MicroStrategy Inc., Marathon Digital Holdings Inc. and Riot Blockchain Inc. all also dropped.

Technical indicators had suggested the strong run of late across the notoriously volatile market was due for a pause.

Some analysts also attributed the dip to new tax-reporting requirements for digital currencies that are part of the $US550 billion infrastructure bill, which President Joe Biden signed into law Monday.

“We’ve seen the U.S. infrastructure bill get signed, which has initiated a selloff from traders who are concerned about regulation and taxation,” said Hayden Hughes, chief executive officer of Alpha Impact, a social-trading platform.

The law imposes new reporting requirements on cryptocurrency “brokers,” like Coinbase, that regularly provide services carrying out transfers of digital assets. Under the new requirements those companies must now supply to the IRS with information on their customers, including: name, address, and phone number; the gross proceeds from sales; and any capital gains or losses.

Hughes also cited concerns about China continuing its regulatory crackdown. The country will study the option of levying punitive power prices for companies that are involved in cryptocurrency mining, National Development and Reform Commission spokeswoman Meng Wei said at a press conference.

“It’s something that Bitcoin is always going to be so volatile toward — the more there is an attempt to regulate it, to control it,” said Fiona Cincotta, senior financial markets analyst at City Index. “It just takes the edge off its draw.”

Meanwhile, Twitter’s chief financial officer said in an interview Monday with Dow Jones that it didn’t make sense to invest the company’s cash in crypto assets such as Bitcoin. Twitter co-founder and Chief Executive Officer Jack Dorsey is one of the highest profile…