Bitcoin heads for worst weekly loss in months

* BTC drops as far as $28,800 before bouncing back near $32k

* "Double spend" report unnerves traders, regulatory talk grows

* Weekly loss of >10% eyed (Updates prices, adds bullets)

By Tom Westbrook

SINGAPORE, Jan 22 (Reuters) - Bitcoin wavered on Friday and was heading toward its sharpest weekly drop since September, as worries over regulation and its frothy rally drove a pullback from recent record highs.

The world's most popular cryptocurrency fell more than 5% to an almost three-week low of $28,800 early in the Asia session, before steadying near $32,000. It has lost 11% so far this week, the biggest drop since a 12% fall in September.

Traders said a report posted to Twitter by BitMEX Research https://twitter.com/BitMEXResearch/status/1351855414103715842 suggesting that part of a bitcoin may have been spent twice was enough to trigger selling, even if concerns were later resolved.

"You wouldn't want to rationalise too much into a market that's as inefficient and immature as bitcoin, but certainly there's a reversal in momentum," said Kyle Rodda, an analyst at IG Markets in Melbourne, in the wake of the BitMEX report.

"The herd has probably looked at this and thought it sounded scary and shocking and it's now the time to sell."

Bitcoin was trading more than 20% below the record high of $42,000 hit two weeks ago, losing ground amid growing concerns that it is one of a number of price bubbles and as cryptocurrencies catch regulators' attention.

During a U.S. Senate hearing on Tuesday, Janet Yellen, President Joe Biden's pick to head the U.S. Treasury, expressed concerns that cryptocurrencies could be used to finance illegal activities.

That followed a call last week from European Central Bank President Christine Lagarde for global regulation of bitcoin.

Still, some said the pullback comes with the territory for an asset that is some 700% above the 2020 low of $3,850 hit in March.

"It's a highly volatile piece," said Michael McCarthy, strategist at brokerage CMC Markets in Sydney. "It made extraordinary gains and it's doing what bitcoin does and swinging around."

Second-biggest cryptocurrency ethereum intially slipped to a one-week low on Friday before rising 6% late in the Asia session to $1,177. (Reporting by Tom Westbrook; editing by Leslie Adler & Simon Cameron-Moore)

First Published: 2021-01-22 02:36:17
Updated 2021-01-22 08:07:11


© 2021 Thomson Reuters. All rights reserved. Reuters content is the intellectual property of Thomson Reuters or its third party content providers. Any copying, republication or redistribution of Reuters content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters. Thomson Reuters shall not be liable for any errors or delays in content, or for any actions taken in reliance thereon. "Reuters" and the Reuters Logo are trademarks of Thomson Reuters and its affiliated companies.