Bitcoin slips below $40,000 as recovery fades

Bitcoin fell 3% on Friday, giving up early gains, as its recovery from this week’s massive plunge showed signs of faltering.

Bitcoin fell to $39,262 on the Bitstamp exchange. That is roughly 30% above its Wednesday low, but just below its 200-day moving average. Rival cryptocurrency ether also came under pressure on Friday, falling 2% to $2,714.

The offloading in crypto world has coincided with a surge in gold, which has hit 4-1/2 month highs and is on track for three straight weeks of gains, rising 1.8% so far this week.

A narrative of bitcoin becoming “digital gold” had gained traction earlier this year, with JPMorgan saying in January that bitcoin emerged as a rival to gold.

But Societe Generale questioned the comparison on Thursday: “Bitcoin has clearly ‘outshone’ gold both to the upside and now also to the downside. But with such a gap in volatility and amplitude, does it make sense to compare the two assets at all?”

Ether is down 24% for the week and bitcoin down 15%. The selloff also spilled over into equity markets on Wednesday, more so in companies with high exposure to cryptocurrencies, such as Coinbase (COIN.O). Coinbase is down 10% this week.

“For assets like crypto and equities the underlying common denominator is very loose central bank policies around the world and that combined with an exuberance for risk taking has filtered into crypto markets,” said Edward J. Perkin, chief equity investment officer at Eaton Vance.

Our Standards: The Thomson Reuters Trust Principles.

Source: https://www.reuters.com/technology/bitcoin-under-pressure-comeback-fades-2021-05-21/