Crypto tokens plunge in fresh sign of global market nerves


SINGAPORE • Bitcoin plunged along with other cryptocurrencies on Saturday, in another indication of the risk aversion sweeping across financial markets. 

The largest digital token fell as low as US$42,296 (RM178,930) before paring some of the tumble. It was trading at about US$48,300 at 10:31am in New York on Saturday, a drop of about 10%. 

The token has now declined more than 20% from the all-time high of more than US$69,000 seen on Nov 10. 

Ether, the second-largest token, fell as much as 17.4% before trimming the retreat to about 4%. The overall crypto sector has shed around a fifth of its value, sliding to US$2.2 trillion, according to tracker CoinGecko. 

It’s not unheard of for crypto-currencies, which trade 24/7, to swing wildly on weekends. That’s owing to a few factors, including 

thinner trading volumes and a market structure that consists of hundreds of disconnected exchanges that in effect are their own islands of liquidity. 

“As usual, since crypto traders deploy leverage, it results in cascading sell orders and liquidations,” said Antoni Trenchev, co-founder of crypto lender Nexo. 

The swings in cryptocurrencies come amid a volatile period for financial markets. Spiking inflation is forcing central banks to tighten monetary policy, threatening to reduce the liquidity tailwind that lifted a wide range of assets. 

The Omicron variant has also led to risk aversion over concerns about what it might mean for global economic reopening. 

Global stocks are down more than 4% from a record in November, while haven assets like US Treasury securities have rallied. 

Some leveraged bitcoin buyers were flushed out in Saturday’s crash, according to Vijay Ayyar, head of Asia Pacific with crypto exchange Luno in Singapore. 

“Markets have also been jittery with all the uncertainty around Omicron, with cases now appearing in many countries,” he said. 

“It’s hard to say what that means for economies and markets and hence the uncertainty.”