Bitcoin reverses weekend rally to drop below US$40,000

HONG KONG (BLOOMBERG) – Bitcoin retreated on Monday (August 2) back below US$40,000 after climbing over the weekend to the highest levels since May. The largest cryptocurrency fell as much as 4.9 per cent and was trading at US$39,790 before noon in Hong Kong.

Other virtual coins, including second-ranked Ether, also fell. Analysts suggested profit-taking lay behind the declines. This is “just a normal pullback following bullish action”, said Mr Vijay Ayyar, head of Asia-Pacific at crypto exchange Luno in Singapore.

The declines put Bitcoin back in the top end of a US$30,000 to US$40,000 trading range that has been in place since a cryptocurrency rout in May. The token has been helped in recent weeks by supportive comments from billionaire Elon Musk and Ark Investment Management chief executive Cathie Wood, as well as speculation over Amazon.com Inc’s possible involvement in the cryptocurrency sector.

At the same time, scrutiny of the industry is intensifying. That includes a push by legislators in the United States for stricter rules on cryptocurrency investors to collect more taxes to fund a portion of a planned US$550 billion (S$744 billion) investment into transportation and power systems.

Crypto traders are also awaiting a software upgrade expected this week to the Ethereum network. It could boost Ether’s price by trimming the pace at which the token’s supply grows.