Cryptocurrencies retreated from record highs amid profit taking by traders

Investors' desire to lock in profits stopped the rally in the cryptocurrency market, which last week led to new historic highs. On August 18, the prices of the largest digital assets - bitcoin and Ethereum - declined. The correction comes amid a downturn in excitement around "digital treasuries" - companies that have fueled growth by accumulating cryptocurrency reserves.

The total capitalization of cryptocurrencies, which reached historic highs last week, fell below $4 trillion on August 18, Bloomberg writes, citing CoinMarketCap calculations. According to the agency, the value of bitcoin on Monday was falling by 2.2% to $115 thousand. Ethereum, the second largest token, was falling by more than 4% - below $4.3 thousand.

The correction followed after bitcoin hit a record high of $125,500 on August 14, while Etherium rose to a level just $100 below its all-time high set in November 2021 on the same day. As Bloomberg notes, the growth of the two largest cryptocurrencies was supported by a wave of institutional investment from so-called digital-asset treasuries (digital-asset treasury, DAT) - companies inspired by the example of Strategy, whose goal is to accumulate cryptocurrency reserves.

"There is profit taking in the market after setting a new all-time high last week," Orbit Markets co-founder Caroline Moron said. She added that "the momentum behind the cryptocurrency boom appears to be waning."

Shares of several large DATs have fallen sharply in recent months, Bloomberg notes. Japanese hotel operator Metaplanet, which has accumulated $2 billion worth of bitcoins, has lost about half of its capitalization since its mid-June highs. Upexi, which switched to buying altcoin Solana this year, has lost about two-thirds of its market value since late April.

The risk of negative implications for bitcoin appears lower, partly because it is less volatile than smaller cryptocurrencies and partly because of its higher liquidity. Another encouraging factor Bloomberg cited was the fact that Michael Saylor's Strategy - a pioneer in the DAT industry and the largest corporate holder of bitcoin - has not sold a single token since it started buying them up five years ago.

In terms of new players, top managers in the crypto industry are not so optimistic. Galaxy Digital CEO Michael Novogratz warned investors in early August that the race to create new DATs might have already reached its peak, and now newcomers "will have a harder time breathing."

This article was AI-translated and verified by a human editor