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Cryptocurrency prices plunged as investors liquidated more than $1 billion worth of digital coins on Thursday after it was reported that Elon Musk’s SpaceX sold off its Bitcoin holdings.
On Thursday, Bitcoin fell 7.2% in its biggest one-day drop since November 2022 when top exchange FTX collapsed. Bitcoin then slipped to a two-month low of $26,172 during Asian trading hours on Friday, its lowest since June 1.
Analysts said cryptocurrencies also appeared to be getting hit as rising interest rates slammed riskier assets across the board including stocks. By early Friday morning Eastern time, Bitcoin was changing hands at $26,441, down 0.8% on the day.
Ether, the second biggest cryptocurrency, was steady at $1,685.20, having also dropped sharply on Thursday.
SpaceX, which is owned by crypto enthusiast Musk, wrote down the value of its Bitcoin holdings by $373 million in the past two years before selling them off, according to The Wall Street Journal, which cited internal financial documents from the privately owned rocket-launching company.
Musk’s electric car maker, Tesla, sold 75% of its Bitcoin holdings last year — another move perceived as a vote of no confidence from the tech mogul who in years past has touted the meme coin Dogecoin.
The SpaceX report was the “immediate catalyst” for bitcoin’s sell-off, Ben Laidler, global markets strategist at eToro, told Reuters.
“The broader driver is that crypto assets are not immune to the deepening risk-off selling pressure seen across all asset classes,” Laidler said.
Joseph Edwards, head of research at Enigma Securities, attributed the bitcoin price move to low volatility and a lack of enthusiasm from retail investors.
After a pandemic era boom that saw the value of Bitcoin skyrocket past $60,000, cryptocurrency has been mired in a slump.
At the height of its wealth, the cumulative worth of digital coins reached nearly $3 trillion in November 2021.
As of Friday, the total market capitalization of all crypto assets including stable coins and tokens was hovering just over $1 trillion.
The crypto community has been hit with a series of legal and regulatory setbacks that have spooked investors.
FTX, which at one point was the second largest cryptocurrency exchange in the world with an estimated market capitalization of $32 billion, was thrown into bankruptcy after its founder, Sam Bankman-Fried, was alleged to have used customer deposits to cover risky bets made by his hedge fund, Alameda Research.
Bankman-Fried, who is in jail awaiting trial on fraud and money laundering charges, has pleaded not guilty.
Coinbase, the largest crypto exchange platform in the US, has been sued by the Securities and Exchange Commission for operating illegally because it failed to first register with the regulator.
The SEC has also targeted the world’s largest crypto exchange, Binance, for allegedly operating a “web of deception.”
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