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Bitcoin pulls back from brink of $50,000

Singapore - Pullback follows surge in wake of Tesla investment.

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Cryptocurrencies slid during Asian trading hours on Monday, with bitcoin dropping more than 5 per cent, as investors took profits from a record-breaking rally.

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Bitcoin fell as much as 5.6 per cent to $45,914 and rival cryptocurrency ethereum dropped more than 8 per cent to $1,655. Both had hit record highs in recent days as the asset class gains more mainstream acceptance.

Once on the fringes of finance, bitcoin is fast gaining legitimacy as an asset class and has leapt 20 per cent in the week since electric carmaker Tesla Inc announced it had $1.5 billion in bitcoin and would accept the currency as payment.

It is up more than 60 per cent for the year to date and has gained more than 1,100 per cent since hitting a one-year low last March.

“There’s this unadulterated wave of big players (buying) that has continued to push the price higher,” said Chris Weston, head of research at Melbourne brokerage Pepperstone. “We might be seeing one or two big funds just cashing out,” he said.

“The big question is: OK, you want to buy the pullback, but how big is the pullback that we are talking about?”

Besides Tesla’s investment, Bank of NY Mellon last week said it formed a new unit to help clients own and trade digital assets.

Bloomberg reported on Saturday that Morgan Stanley’s investment arm is weighing a bet on bitcoin.

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