This year’s furious rally in cryptocurrencies lost steam Tuesday, knocking prices for bitcoin and ether from recent highs, alongside drops in other risky assets including tech stocks.
Bitcoin fell 11% to $47,145 after hitting a record of $58,332 Sunday, according to CoinDesk. The decline lowered its market cap—the value of all bitcoin in circulation—to $878 billion, down from more than $1 trillion last week. Ether, the second-largest cryptocurrency by total market value, fell almost 13% to $1,523.
A broad turn in markets toward caution, coupled with historically high prices, likely triggered the correction, analysts and investors said.
“The types of moves we were seeing in 2021 were parabolic,” said Joel Kruger, a strategist at cryptocurrency exchange LMAX Digital. “When you see moves like that, it’s obvious these markets are going to be due for a pullback.”
Assets—crypto or otherwise—that gained the most during the pandemic have slipped in recent days as investors bet on economies opening up. U.S. government bond yields have risen to their highest level in a year. When yields on safe bonds rise, that makes speculative assets, such as cryptocurrencies and shares in companies with profits far in the future, less attractive.