UPDATE 3-Bitcoin plummets as doubts grow over sky-high valuation – Yahoo Finance

* Slumps as much as 17% to $45,000

* Second-biggest coin ethereum drops 20%

* Pullback follows record high weekend peaks

* Traders cite unwinding of leveraged bets(Updates prices, adds data, comment)

By Tom Wilson and Tom Westbrook

LONDON/SINGAPORE, Feb 23 (Reuters) – Bitcoin plummeted asmuch as 17% on Tuesday as investors grew nervous at sky-highvaluations, triggering the liquidation of leveraged bets andsparking a sell-off across cryptocurrency markets.

The world’s biggest cryptocurrency was facing itsbiggest daily drop in a month, falling to as low as $45,000. Inchoppy trading, it was last down 15.6%.

The drop took its losses to over a fifth from a record highof $58,354 hit on Sunday and underscored the volatility of theemerging asset – though it is still up around 60% this year.

“The kinds of rallies we’ve been seeing aren’t sustainableand just invite pullbacks like this,” said Craig Erlam, seniormarket analyst at OANDA. “It was an extremely overboughtmarket.”

Ether, the world’s second largest cryptocurrencyby market capitalisation that often moves in tandem withbitcoin, also dropped more than 20% to $1,410, down over 30%from last week’s record peak.

Cryptocurrency markets have been running hot this year asbig money managers and companies begin to take the emergingasset class seriously, piling money into the sector and drivingconfidence among small-time speculators.

A $1.5 billion investment by electric carmaker Teslathis month has helped vault bitcoin above $50,000 butmay now lead to pressure on the company’s stock price as it hasbecome sensitive to movements in bitcoin.

LEVERAGED LOSSES

Rising government bond yields over recent days have hitriskier assets in traditional markets, with the caution spillingover into highly leveraged bitcoin markets, said Richard Galvinof crypto fund Digital Asset Capital Management.

Exchanges popular with cryptocurrency investors in Asia,including Binance and Huobi, accounted for about 70% ofliquidations of leveraged bets over the last 24 hours, accordingto crypto data site Bybt.

Bitcoin’s losses were “compounded by the amount ofliquidation that has happened in the last 24 hours”, said Lan Guof Alameda Research, a crypto trading firm.

The cryptocurrency’s rapid gains in recent months have ledto calls from governments and financial regulators for tighterregulation.

U.S. Treasury Secretary Janet Yellen said on Monday thatbitcoin was extremely inefficient at conducting transactions andwas a highly speculative asset.

Bitcoin’s high volatility, critics say, is among reasonsthat it has so far failed to gain widespread traction as a meansof payment – an expectation that has in part fuelled its rally.

Analysts said that, with few fundamental factors by which tojudge bitcoin’s value, key price levels would play a large partin determining the direction of crypto markets.

“It’s the big figures that have proved to be support andresistance points,” said Michael McCarthy, chief strategist atbrokerage CMC Markets in Sydney. “$50,000, $40,000 and $30,000are the key chart levels at the moment.”(Reporting by Tom Wilson in London and Tom Westbrook inSingapore; Editing by Jacqueline Wong and Nick Macfie)

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UPDATE 3-Bitcoin plummets as doubts grow over sky-high valuation – Yahoo Finance

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