Dec 4 (Reuters) - Bitcoin shed a fifth of its value on Saturday as a combination of profit-taking and macro-economic concerns triggered nearly a billion dollars worth of selling across cryptocurrencies.
Bitcoin was 12% down at 0920 GMT at $47,495. It fell as low as $41,967.5 during the session, taking total losses for the day to 22%.
The broad selloff in cryptocurrencies also saw ether , the coin linked to the ethereum blockchain network, plunge more than 10%.
Based on cryptocurrency data platform Coingecko, the market capitalisation of the 11,392 coins it tracks dropped nearly 15% to $2.34 trillion. That value had briefly crossed $3 trillion last month, when bitcoin hit a record $69,000.
The plunge follows a volatile week for financial markets. Global equities and benchmark U.S. bond yields tumbled on Friday after data showed U.S. job growth slowed in November and the Omicron variant of the coronavirus kept investors on edge. read more
Justin d'Anethan, Hong Kong-based head of exchange sales at cryptocurrency exchange EQONEX, said he had been watching the increase in leverage ratios across the cryptocurrency markets as well how large holders had been moving their coins from wallets to exchanges. The latter is usually a sign of intent to sell.
"Whales in the crypto space seem to have transferred coins to trading venue, taken advantage of a bullish bias and leverage from retail traders, to then push prices down," he said.
The selloff also comes ahead of testimony by executives from eight major cryptocurrency firms, including Coinbase Global (COIN.O) CFO Alesia Haas and FTX Trading CEO Sam Bankman-Fried, before the U.S. House Financial Services Committee on Dec. 8. read more
The hearing marks the first time major players in the crypto markets will testify before U.S. lawmakers, as policymakers grapple with the implications of cryptocurrencies and how to best regulate them.
Last week, the U.S. Securities and Exchange Commission (SEC) rejected a second spot-bitcoin exchange-traded fund proposal from WisdomTree.
Data from another platform Coinglass showed nearly $1 billion worth of cryptocurrencies had been liquidated over the past 24 hours, with the bulk being on digital exchange Bitfinex.
"If anything, this is the opportunity to buy the dip for many investors who might have previously felt like they missed the boat. We can see tether bought at a premium, suggesting people are getting cash ready, within the crypto space, to do just that," D'Anethan said, referring to the biggest stablecoin in the cryptocurrency world.
A plunge in bitcoin funding rates -- the cost of holding bitcoin via perpetual futures which peaked at 0.06% in October -- also showed traders had turned bearish.
The funding rate on cryptocurrency trading platform BitMEX fell to a negative 0.18% from levels of 0.01% for most of November.
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Tether doesn't have any banking relationships either though, and none of these "stable coins" actually have cash reserves even close to what they'd need to back their market value.
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The whole point of tether is that it's (allegedly) backed by the dollar though. That's why it's called a stable coin in the first place. The only reason it's used as a root currency is because it's supposed to be a crypto stand in for the dollar which can be exchanged at any moment, but because they just print infinite money and it inflates massively in value they can't fulfill their end of the bargain. Also all an attestation is is an accounting firm looking in a company's records at a specific time and seeing what their numbers say. At that time USDC did appear to be backed by assets but it's because the company transferred hundreds of millions of dollars in assets from unknown sources into the company's funds shortly before the attestation without disclosing.
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I am indeed thinking of Tether, whoops. Regardless, using a worthless currency as the basis for a "legitimate" exchange is at the very least foolish if not extremely malicious.
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They are, most of the "action" is people playing with leverage which makes it easy for whales to constantly do pump and dumps without actually "dumping" long term.