Bitcoin dips 5% after bruising weekend

HONG KONG, December 6 -- Bitcoins fell almost 5% on Monday as the start of the week offered little respite to the world's largest criptocurrency after a bruising weekend where it lost a fifth of its value.

The rout sent the price of bitcoins and the amount invested in bitcoin futures back to where they were in early October, before a huge price surge that sent the token to an all-time high of $69,000 on November 10.

It was down 3.9% at $47,567 at the end of the day.

Traders said the weekend fall was linked to a move away from riskier assets in traditional markets due to concerns about the Omicron variant of the coronavirus, coupled with lower trading liquidity that tends to plague cryptocurrencies at weekends.

The rest of Q 4 will be a hard month, and we aren't seeing the strength inBitcoin that we usually see after one of these crushing days, said Matt Dibb, Stackfunds, a Singapore-based fund distributor.

Open interest within the leverage markets has completely been reset, and leverage markets have been completely reset. Coinglass showed open interest - the total number of futures contracts held by market participants at the end of the trading day - across all exchanges last at $16.5 billion compared to $23.5 billion on Thursday and as much as $27 billion on November 10.

There's barely any liquidity on weekends so markets are slightly more vulnerable to shocks - that and a lot of demand come from institutionals, and they're not trading over the weekend, said Joseph Edwards, head of research at Enigma Securities in London.

Over the weekend, as prices fell, investors who had bought bitcoins on margin saw exchanges close their positions, leading to a cascade of selling. More than $2 billion of long bitcoin positions were closed on Saturday by a range of retail-focused exchanges, according to Coinglass.

Some exchanges allow traders to place bets 20 times or more the size of their investment, so a small move in the wrong direction can cause exchanges to liquidate their clients' positions when their initial investment is gone.

Ben Caselin, head of Asia-based AAX, said that the liquidity had become thin because of the move off exchanges to offline digital wallets.

On Saturday, the world's second-largest criptocurrency was hit, albeit less hard. It fell 5.5% to $3,965, versus its Nov. 10 high of $4,868, though it has gained on its larger rival.

One ether went to as high as 0.086Bitcoin its highest since May 2018 and rose to as high as 0.086Bitcoin.

On Monday, CME Group Inc will launch ether mini futures, which they hope will help traders manage the risk of trading the coin.