Bitcoin Rollercoaster Ride Continues

Bitcoin, the world’s most valuable cryptocurrency, slid to below $45,000 on Tuesday from a near four-month high of about $52,000, hours after it debuted as legal tender in El Salvador, the first country to do so.

Other cryptocurrencies such as Ethereum, Binance Coin and Cardano also plunged between 13% and 18% on Tuesday, while meme coins such as Tesla founder Elon Musk-endorsed Dogecoin and Shiba Inu – a cryptocurrency named after a doge-themed meme and launched to rival Dogecoin – dropped as much as 33% and 70%, respectively, at one point.

Experts attributed the ‘flash crash’ to a lack of liquidity in crypto markets, which could give disproportionate power to large holders, and the fact that crypto markets are sentiment-driven and lack proper regulation. Meme coins are particularly volatile and could be driven by a “buy the rumor, sell the news” philosophy, said an industry expert.

Algorithmic trading programmers that sell or buy at pre-set price levels, once activated, could have also added to the pressure, experts said. Unlike traditional stock markets, they said, crypto markets lack circuit breakers, which are triggered in case an index or a stock fluctuates beyond a set threshold. Wild swings are a standard feature of cryptocurrency markets, they added.  S-ET

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