Bitcoin tumbles as it tests 2018 lows

There were no good spots for investors to hide in Thursday’s global equities rout, as cryptocurrencies joined the selloff.

Bitcoin, the largest digital currency, fell almost 7% to the lowest since mid-August, before paring its loss to 5.1% as of 8:08 a.m. in New York, according to prices compiled by Bloomberg. The Bloomberg Galaxy Crypto Index tumbled 10 percent, headed for a third day of losses.

Rival coins Ether, XRP and Litecoin retreated 11% to 13%.

“The global sell-off in equities has indeed spilled over to the crypto space,” said Ryan Rabaglia, head of trading with cryptocurrency dealing firm OSL in Hong Kong.

“The days of crypto being the safe-haven play and having a high degree of detachment from the rest of the world are seemingly diminishing.”

Increased institutional attention on the cryptocurrency space has led to greater correlation with traditional assets, although this trend is not expected to last, he said.

There is some speculation of Japanese day traders selling to satisfy margin calls on stocks. Bitcoin is positively correlated to many stock indexes in Asia. That’s where the biggest declines are on Thursday, with China’s Shanghai Stock Exchange Composite Index tumbling 5.2%. While Bitcoin has mostly stayed above $6,100 this year, some analysts are watching out for a lower resistance level.

“With the 2018 low of $5,800 being tested a number of times, our sights are set at that level for all further sell-offs,” Rabaglia said.

The biggest stock sell-off since February rolled from the US through Asia Thursday, with most benchmarks across the region tumbling at least 3.5%. Concern about the impact of the US-China trade war, 10-year Treasury yields touching a 2011 high and the Federal Reserve’s monetary tightening are all contributing to market nervousness.

Cryptocurrencies have given up more than $600 billion in value from a January peak as the boom in initial coin offerings last year fades further into memory. Mainstream adoption of digital currencies has failed to materialize this year amid a series of exchange hacks and increased regulatory scrutiny.

“It is clear by now that Bitcoin and other cryptocurrencies represent the mother of all bubbles,” Nouriel Roubini, chairman at Roubini Macro Associates and a professor at NYU Stern School of Business, said in prepared testimony for a US Senate Banking Committee hearing on cryptocurrencies and blockchain scheduled Thursday in Washington.

“No asset class in human history has ever experienced such a rapid boom and total utter bust and implosion.”

In a scathing testimony, Roubini argued the blockchain technology that underpins Bitcoin and other cryptos is “the most over-hyped and least useful technology in human history” and “nothing better than a glorified spreadsheet or database.”

Coinbase Inc, one of the world’s largest crypto exchanges, took an even bigger hit than the broader market, according to data collected Tribe Capital. The fintech-focused venture firm said it found the number of monthly US customers buying and selling on the platform in September declined about 80% from December, when the price of Bitcoin reached its all-time high of nearly $20,000.

Read: A new phase for Bitcoin or the beginning of the end?

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Bitcoin tumbles as it tests 2018 lows