(Bloomberg) — Bitcoin dropped below $42,000 for the first time in a week and the recent rally in memecoins has started to show signs of stalling.
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The largest cryptocurrency by market value dropped as much as 4.3% to $41,656 on Tuesday in New York. Smaller, less known tokens that have rallied in recent weeks such as Solana and Avalanche fell more, declining more than 10% each.
“Looking ahead, I would stay cautious and brace for potential volatility this week because of year-end flows, options and futures expiries and the overall environment with thin liquidity because of the holidays,” said Jaime Baeza, CEO at crypto hedge fund AnB Investments.
“The main thing we have our eye on now is the expiration of BTC options on Dec. 29,” said Greg Moritz, co-founder at crypto hedge fund AltTab Capital. “Usually, when we see a day with such a large amount of options expiring, we expect significant volatility on that day.”
Bitcoin has surged more than 150% this year on optimism that the US Securities and Exchange Commission will soon give their first blessing for an exchange-traded fund that invests directly in the digital asset. Investors will find out by Jan. 10 if that bet, which crypto bulls consider a near-certain winner, pans out.
Meanwhile, the biggest gains have come as of late from memecoins such as Dogwifhat and new-fangled nonfungible tokens. Many of these tokens have jumped more than 1,000% in a matter of days while still trading at a fraction of a cent. The exuberance is now easing, with Dogwifhat down around 30% and Bonk off around 15%.
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