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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to end the week on a subdued note. At the time of writing, the benchmark index is down slightly to 7,015.4 points.

Four ASX shares that are falling more than most today are listed below. Here’s why they are tumbling lower:

Appen Ltd (ASX: APX) 

The Appen share price is down 4% to $13.29. This decline appears to have been driven by a combination of profit taking and a broker note out of Macquarie Group Ltd (ASX: MQG). The latter has seen the broker retain its neutral rating but cut its price target to $14.70. Macquarie notes that the company is facing headwinds that could make achieving its guidance difficult.

Kogan.com Ltd (ASX: KGN)

The Kogan share price has crashed 13% to $8.83. Investors have been selling the ecommerce company’s shares following the release of a trading update. That update reveals that inventory issues, promotional activities, and cost inflation are weighing on its performance. As result, it expects to report adjusted EBITDA of $58 million to $63 million in FY 2021. This is well short of the market’s expectations.

Nufarm Ltd (ASX: NUF)

The Nufarm share price has fallen 7% to $4.71. This decline appears to have been driven by a broker note out of Morgan Stanley this morning. According to the note, the broker has downgraded the agricultural chemicals company’s shares to an equal weight rating and with a $5.30 price target. It made the move on valuation grounds.

Red 5 Limited (ASX: RED)

The Red 5 share price has sunk 13% to 17 cents. Investors have been selling the gold miner’s shares after it downgraded its production guidance. According to the release, the company expects production from the Darlot Gold Mine to be 74,000–78,000 ounces in FY 2021. This is down from the previous estimate of 80,000­–85,000 ounces. It also increased its cost guidance to $2,240–$2,290 per ounce, up from its previous guidance of $2,150–$2,280 per ounce.

More reading

• Here’s why the Appen (ASX:APX) share price is sinking 6% today
• Kogan (ASX:KGN) share price sinks 12% on profit downgrade
• Why ASX gold miner Red 5’s (ASX:RED) share price is tumbling 10% lower
• ASX 200 down 0.25%: Kogan sinks, EML & A2 Milk jump
• Brokers name 3 ASX shares to buy now

The post Why Appen, Kogan, Nufarm, & Red 5 shares are sinking appeared first on The Motley Fool Australia.

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The Cimic Group Ltd (ASX: CIM) share price is rising during afternoon trade. This comes after the company announced an issuance of Eurobonds.

At the time of writing, the engineering company’s shares are up 1.24% to $21.16.

The Cimic Group provides a range of services to the infrastructure, resources and property markets. These include construction, mining, mineral processing, engineering, concessions, and operation and maintenance services.

The Cimic Eurobond issuance

The Cimic share price rise came on the back of the company’s latest update.

In a statement to the ASX this morning, Cimic advised it has issued a €500 million corporate Eurobond.

The offer received broad interest from investors, which led to an oversubscription of more than double the orderbook.

The fixed-rate notes, with a maturity of 8 years, were priced at a yield of 1.593%.

CIMIC group executive chair and CEO, Juan Santamaria commented:

“This successful transaction represents CIMIC’s debut issue in the European Debt Capital Markets and achieves a substantial extension of CIMIC’s long-term debt maturity profile.”

The proceeds from the issuance will be put towards general working purposes, including refinancing the company’s existing bank facilities.

Moody’s and S&P Global Ratings bond award

Bond rating agencies are firms that evaluate the creditworthiness of both the debt securities and the issuing company. These agencies provide ratings, commentary and research on businesses. The ratings are then used by investment professionals to determine the likelihood of the debt being repaid.

Bond ratings range from an investment grade of ‘AAA’, meaning a very strong capacity to meet financial commitments, and minimal credit risk. The speculative grade of ‘C’ or ‘D’ indicates likely payment default on financial commitments, and bankruptcy.

Credit ratings agencies Moody’s and S&P Global Ratings (formerly Standard & Poor’s) will award the bonds with solid ratings of Baa2 and BBB, respectively. This is in the mid-range of the bond credit ratings, stating “adequate capacity to meet financial commitments, moderate credit risk”.

About the Cimic share price

Over the last 12 months, the Cimic shares have sunk more than 10%, with year-to-date performance around 15% lower. The company’s share price reached a 52-week high of $28.72 last June, before moving in circles.

More recently, Cimic shares hit a 52-week low of $16.86 last month, and have slowly bounced back higher.

Based on valuation grounds, Cimic commands a market capitalisation of roughly $6.5 billion, with approximately 311 million shares outstanding.

More reading

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• ASX 200 Weekly Wrap: Shares have average week but a great month
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• Why the CIMIC (ASX:CIM) share price has see-sawed this morning

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The Afterpay Ltd (ASX: APT) share price has been looking awfully bearish, setting lower highs and lower lows after its February peak.

However, the leading ASX buy now, pay later (BNPL) company has bounced off lows with conviction, rallying up to 10% higher this week. What’s behind Afterpay’s recent sign of strength?

Why is the Afterpay share price rallying this week?

Broader BNPL sector bouncing back

ASX-listed BNPL shares have largely bounced off near-term lows, with strong performances this week despite broader market volatility.

The Zip Co Ltd (ASX: Z1P) share price hit a 5-month low of $6.48 last Thursday, and has rallied almost 20% since.

US-based rival, Sezzle Inc (ASX: SZL) also bounced off 1-month lows of $7.00 last Friday, and is up 12%.

BNPL shares with a smaller market capitalisation and lack of international expansion were the most hard-hit when the sector started selling off. The likes of Laybuy Group Holdings Ltd (ASX: LBY), Openpay Ltd (ASX: OPY) and Splitit Payments Ltd (ASX: SPT) have all slumped more than 50% in the last 6 to 12 months.

The Laybuy share price has slipped lower this week, but understandably so after a $35 million capital raising at 50 cents per share, or a 26.5% discount to the closing price before the announcement. Openpay and Laybuy have both pushed higher this week.

Over on Wall Street in the US, the Affirm Holdings Inc (NASDAQ: AFRM) share price also staged a strong rally last night, perhaps setting precedence for ASX-listed BNPL shares on Friday. Affirm bounced strongly off lows, surging 8.80% to close at US$54.89.

Afterpay shares stand tall amid Wednesday’s selloff

Wednesday was a sea of red for the S&P/ASX 200 Index (ASX: XJO), with a sharp fall of almost 2%.

Typically, such a significant decline in the broader market would drag the Afterpay share price lower. However, its shares managed to withstand the selloff, closing the day almost 1% higher.

Love coming back to tech shares

The S&P/ASX 200 Info Tech (INDEXASX: XIJ) has taken a beating in recent weeks, down 20% between 15 April and 13 May. The large cap movers for the tech index include Afterpay, Xero Ltd (ASX: XRO) and WiseTech Global Ltd (ASX: WTC), all of which have slumped to near-term lows.

This week, the ASX200 tech index has managed to find its footing and climbed 7.4%.

More reading

• Should ASX investors be fearful of greed in the face of inflation?
• Why a2 Milk, EML Payments, Webjet, & Xero shares are pushing higher
• 5 things to watch on the ASX 200 on Friday
• 2 highly rated ASX growth shares
• Is the Afterpay (ASX:APT) share price cheap? Here’s what 1 broker thinks

The post Why the Afterpay (ASX:APT) share price is up 10% this week appeared first on The Motley Fool Australia.

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ASX investors are turning their attention from the potential risks and rewards thrown up by the pandemic to how best to play rising inflation fears.

Fear sets in when the wider financial news narrative indicates that the resurgent inflation witnessed across much of the developed world could be entrenched. Meaning central banks may be forced to raise official interest rates from their rock bottom lows. A move many shares on the ASX almost certainly won’t like.

Greed sets in when the narrative, widely supported by the central bankers themselves, shift to indicate that the current price rises are only transitory. Meaning inflation over the coming few years will remain subdued. Interest rates will remain at record lows. And shares on the ASX will continue to enjoy that welcome easy money tailwind.

Inflation’s outlook for the ASX

For a better idea of how to position your ASX investment portfolio as inflation re-emerges following a lengthy hibernation, we turn to the experts.

According to UBS Global Wealth Management’s Chief Investment Officer Mark Haefele (quoted by Bloomberg):

Investors should brace for further bouts of volatility, driven by inflation data along with other risks, such as setbacks in curbing the pandemic. But we don’t see inflation concerns ending the rally in stocks, which we expect to be led by cyclical parts of the market as the global economic reopening broadens.

Inflation’s impact on the ASX was a hot topic at yesterday’s Stockbrokers and Financial Advisers Association conference as well.

Jun Bei Liu, portfolio manager at Tribeca Investment Partners, said (quoted by the Australian Financial Review):

It’s too early to call if inflation is structural, it seems like it’s transitory but we have to take another six months before we know if it’s long standing. In this environment, you want to be in companies that can pass on that inflation and these are the leaders of the sectors – pick them up as they get sold off because we don’t know how long this inflation will last.

Andrew Smith, head of smaller companies at Perennial Value Management added:

Inflation does influence the cost and price of money and naturally pushes people towards cash flows that are more near-term, so yes, it pushes people towards more value style investments. But it can be dangerous for some value stocks too. Value stocks sometimes have low margins, low pricing power and that’s where inflation will kill your earnings.

Which shares are looking promising in 2021?

Tribeca’s Liu has a broadly bullish outlook for the ASX this year. She points to Treasury Wine Estates Ltd (ASX: TWE) and Xero Limited (ASX: XRO) as companies that look particularly well-positioned.

The market is looking really strong towards the end of the year so you want to buy businesses where its share price doesn’t reflect its strong business model such as Treasury Wine Estates and growth leaders such as Xero.

More reading

• Why a2 Milk, EML Payments, Webjet, & Xero shares are pushing higher
• 2 excellent ASX 200 blue chip shares to buy
• 2 high quality ASX 50 shares given buy ratings
• Which ASX 200 shares withstood today’s selloff?
• Leading brokers name 3 ASX shares to sell today

The post Should ASX investors be fearful of greed in the face of inflation? appeared first on The Motley Fool Australia.

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The tech sector may be performing positively today, but the same cannot be said for the Appen Ltd (ASX: APX) share price.

In afternoon trade, the artificial intelligence (AI) data annotation products and solutions provider’s shares are down 6% to $13.02.

Despite this decline, the Appen share price is still up 19% since the end of last week.

Why is the Appen share price sinking today?

There appear to be a couple of catalysts for the weakness in the Appen share price today.

The first is profit taking. Prior to today, the Appen share price was up a massive 26% week to date. This strong gain was driven by improving sentiment in the tech sector and the release of a restructure and trading update.

The restructure will see Appen align its business with its product-led growth strategy and distinct customer propositions. This will mean four customer-facing business units – Global, Enterprise, China, and Government. Management believes the changes will provide greater visibility of the drivers and performance of the business.

Whereas the latter revealed that Appen is on course to achieve its FY 2021 guidance. Appen is forecasting underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of US$83 million to US$90 million in FY 2021. This represents growth of 18% to 28% year on year.

What else is weighing on its shares?

In addition to profit taking, a broker note out of the Macquarie Group Ltd (ASX: MQG) equities desk appears to have taken the wind out the sails of the Appen share price.

According to the note, the broker has retained its neutral rating but trimmed its price target down to $14.70.

Macquarie believes that Appen is still facing a battle to achieve its reiterated guidance for FY 2021. It also fears the market may be a little too optimistic at this point.

In light of this, the broker isn’t in a rush to change its rating just yet and appears to believe investors should keep their powder dry for the time being.

More reading

• Brokers name 3 ASX shares to buy now
• 5 things to watch on the ASX 200 on Friday
• Appen (ASX:APX) share price rises further following investor presentation
• ASX 200 sinks, EML plunges, Appen soars
• Which ASX 200 shares withstood today’s selloff?

The post Here’s why the Appen (ASX:APX) share price is sinking 6% today appeared first on The Motley Fool Australia.

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Shares in the Australia and New Zealand Banking Group Ltd (ASX: ANZ) have outperformed all other S&P/ASX 200 Index (ASX: XJO) banks this week. At the time of writing, the ANZ share price has gained 2% since last Friday’s close and is trading at $27.97.

In comparison, the ASX 200 has gained 0.25% in the same time frame.

The other big ASX 200 banks are on ANZ’s tail today. Shares in Commonwealth Bank of Australia (ASX: CBA) are closing in with a gain of 1.69% across the course of the week.  While National Australia Bank Ltd (ASX: NAB) and Westpac Banking Corp (ASX: WBC) shares are up 0.74% and 1.06% respectively.

Other ASX 200 banks posting share price gains this week include Bendigo and Adelaide Bank Ltd (ASX: BEN). It’s up 0.59%. While shares in the Bank of Queensland Ltd (ASX: BOQ) have fallen 0.91%.

Let’s take a look at the ANZ share price performance lately.

Leader of the pack

This week has been volatile for the ASX 200, and the ANZ share price wasn’t immune to the madness. But, despite the volatility, the ANZ share price recorded a strong gain, helped by a few key pieces of good news.

The Motley Fool Australia reported on Monday that Macquarie Group Ltd (ASX: MQG) analysts have pegged ANZ as potentially the better big bank to buy shares in.

According to Macquarie, ANZ was the only bank that didn’t experience a revenue (excluding markets income) decline in its half-year results.

Its analysts stated the bank has continued to be better value compared to others and opted to maintain its $30.50 target price.

Also making news throughout the week was the expectation that ASX bank’s dividends may soon return to pre-COVID-19 normal.

On Wednesday, The Motley Fool Australia reported that co-portfolio manager of the Investors Mutual Australian Share Fund Daniel Moore believes 2021 will be a great year for banking dividends. Moore was quoted by the Australian Financial Review (AFR) as saying:

We now have a strong platform going forward for economic activity and company earnings. All this indicates that the outlook for dividends in 2021 and beyond is strong, and payout ratios are likely to improve.

ANZ share price snapshot

The ANZ share price having more than a great week on the ASX.

Currently, the ANZ share price is 21.05% higher than it was at the start of 2021. It’s also gained 81.22% since this time last year.

The bank has a price-to-earnings (P/E) ratio of 16.50. Its market capitalisation is around $79 billion, with approximately 2.8 billion shares outstanding.

More reading

• ASX 200 down 0.25%: Kogan sinks, EML & A2 Milk jump
• Top brokers pick these 3 underperforming ASX shares as their latest buy idea
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• Can the Commonwealth Bank (ASX:CBA) share price crack $100?
• ASX 200 jumps, Qantas flies, Nufarm rises

The post The ANZ (ASX:ANZ) share price leads the ASX 200 banks this week appeared first on The Motley Fool Australia.

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The Kogan.com Ltd (ASX: KGN) share price is plummeting today after the company provided a subdued business update for FY21.

During early afternoon trade, the e-commerce company’s shares are fetching $8.98, down a sizeable 11.53%.

What is happening with the Kogan share price?

Investors are driving Kogan shares well into the red today after digesting the company’s latest trading update.

According to this morning’s release, Kogan is reporting a number of issues that has led it to cut its guidance for the current financial year.

The business advised that, despite doubling in growth over the first half of FY21, operational challenges have been encountered. These relate to excess inventory holdings which have had a profound impact on storage costs. In addition, the company has experienced supply chain and logistical issues, setting back its FY21 financial targets.

Kogan stated that, in responding to the rapid increase in customer demand, it expanded its logistics capability to 31 facilities over the last 5 months. However, this has imposed higher warehouse costs for unused stock left sitting on the floor. To manage this, the company has discounted products and increased promotional marketing spend. Consequently, this has weakened Kogan’s near-term gross margin.

Furthermore, price inflation on many consumer products is being noticed as the company orders ahead for the busy Christmas period later this year. Kogan stated that the cause is due to ‘COVID-19 market dislocations’ along with rising international shipping costs.

The company also highlighted that demurrage fees incurred in April have now been resolved. This imposed a significant cost to the business since the start of the calendar year.

As a result, Kogan has dropped its earnings guidance for FY21, which sent investors heading for the hills. Kogan said its underlying operating performance is continuing to face short-term challenges.

FY21 adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) is projected to come in the range of $58 million to $63 million. This is a substantial fall from the previous $67 million to $72 million in EBITDA previously indicated. In percentage terms, this equates to a fall of 11% to 18% on market expectations.

However, Kogan did highlight it expects current inventory levels to reduce progressively over the coming few months.

On another positive note, the company said that its future prospects remain upbeat. Kogan highlighted that its position in the Australian and New Zealand online retail markets is strong. Currently, its online sales division only accounts for a small percentage of the total retail sales market in both countries. This potentially provides the company with an attractive opportunity to pursue and expand its digital footprint.

More about Kogan

Kogan operates a portfolio of retail and services businesses that includes Kogan Retail, Kogan Marketplace, Kogan Mobile, Kogan Broadband, Kogan Insurance and Kogan Travel. The parent company is a leading Australian consumer brand renowned for price competitiveness through its digital offering.

According to Kogan, the company is focused on making in-demand products and services more affordable and accessible to everyday consumers.

Over the past 12 months, Kogan shares have had an interesting run, moving initially higher before heading downward. In this timeframe, the company’s shares have recorded a loss of around 5% and a year-to-date decline of around 53%. Kogan shares hit a 52-week high of more than $25 in October last year.

Based on valuation metrics, Kogan has a market capitalisation of around $1 billion, with roughly 106 million shares outstanding.

More reading

• ASX 200 down 0.25%: Kogan sinks, EML & A2 Milk jump
• 2 exciting ASX growth shares rated as buys
• Is the a2 Milk (ASX:A2M) share price a bargain or value trap?
• These are the 10 most shorted shares on the ASX
• 2 growing ASX dividend shares to buy

The post Kogan (ASX:KGN) share price sinks 12% on profit downgrade appeared first on The Motley Fool Australia.

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The A2 Milk Company Ltd (ASX: A2M) share price has been a pretty unrewarding performer over the past few months. Since topping out at more than $20 a share last August, the A2 Milk share price has spent the months since slowly going sour. Hit by a seeming avalanche of earnings downgrades (4 so far), investors have been hitting the sell button on A2 Milk. Just this week, the company hit a new 52-week (And multi-year) low of $5.04 a share. That’s a good ~75% off of its high from last year.

Bad and worse

A2 was hit on multiple fronts. The coronavirus pandemic and the cessation of tourism around the world caused the daigou trade to come to a shuddering halt. Daigou is when customers buy products (in this case, A2 Milk products) in Australia, and then have them sent to a secondary market in China. Due to import restrictions and the complex politics of the Chinese economy, daigou is often the only way some Chinese customers get to enjoy A2 products. Or at least, it was. The pandemic caused this lucrative sales channel for A2 Milk to dry up. Although things have been loosening up slowly, the ongoing diplomatic spat between the Australian and Chinese governments has been hindering daigou resumption as well.

Long story short, A2 has had to downgrade its earnings expectations for FY2021 and beyond largely due to these concerns. It’s also flagged some inventory issues in its latest downgrade. Needless to say, investors have been less than impressed. As a result, A2 hit its lowest share price since 2017 this week.

But yesterday and today have seen a sharp reversal of this sentiment. A2 shares rose roughly 2% yesterday, and are up a robust 6.99% today (at the time of writing) to $5.58 a share.

So why have the tides of sentiment suddenly changed on this company?

Are A2 Milk shares a buy today?

Well, as my Fool colleague Brendon Lau reported this morning, A2 Milk has received some love from a broker. UBS has reportedly given A2 a ‘buy’ rating. That comes with a 12-month price target of NS$13.50. This translates roughly to $12.50 in AUD terms on today’s exchange rate. UBS cites tightening inventory, as well as market share, for its optimism for A2. That’s probably exactly what investors wanted to hear on A2 after the week the company just had. This price target implies a future upside of more than 120%.

More reading

• Why a2 Milk, EML Payments, Webjet, & Xero shares are pushing higher
• ASX 200 down 0.25%: Kogan sinks, EML & A2 Milk jump
• Top brokers pick these 3 underperforming ASX shares as their latest buy idea
• Is the A2 Milk (ASX:A2M) share price too cheap to ignore?
• Is the a2 Milk (ASX:A2M) share price a bargain or value trap?

The post Why is the A2 Milk (ASX:A2M) share price up 7% today? appeared first on The Motley Fool Australia.

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The telecommunications watchdog has issued a formal warning to Telstra Corporation Ltd (ASX: TLS) for inadequate identity checks during number porting requests.

For many years, Australians have been able to switch mobile providers but still retain their phone number by a process called “porting”.

Unfortunately in the past, scammers had hijacked victims’ numbers to port it to their own phone — then would use the assumed identity to steal money.

In early 2020, new rules were implemented that required telcos to rigorously check people’s identities before granting porting requests.

“Historically it has been too easy to transfer phone numbers from one telco to another. All a scammer needed to hijack a mobile number and access personal information like bank details was a name, address and date of birth,” said Australian Communications and Media Authority (ACMA) chair Nerida O’Loughlin.

“These new rules help prevent scammers from taking control of people’s identities to commit serious financial crimes.”

On average, mobile number porting identity theft victims lose more than $10,000. But the time and psychological cost is greater, with years of stress to regain control of their identity with finance providers and credit ratings agencies.

Telstra’s identity sins 

Despite the new rules, ACMA found that Telstra breached ID verification processes at least 52 times in mid-2020.

Its big rival Optus broke the rules on one occasion, and smaller player Medion Mobile dropped the ball on 53 instances.

All three companies copped a formal warning from ACMA this week.

“We are cracking down on telcos that don’t follow the rules and leave customers vulnerable to identity theft,” O’Loughlin said.

A Telstra spokesperson told The Motley Fool that the company is a “big supporter” of the new rules.

“Unfortunately when these rules first came into effect, we didn’t have all our processes in place to implement some of the changes as quickly as we should have,” said the spokesperson.

“That meant in a small number of cases we let customers down, and we apologise to anyone affected. Since then we have put these new processes in place and seen a dramatic reduction in fraudulent port-ins.”

At the time of writing on Friday, the Telstra share price is trading 0.87% lower at $3.41.

According to ACMA, the 2020 reforms have seen the volume of ID theft drop “dramatically”.

“Some telcos are finding that fraudulent porting has stopped completely, and others report a drop of more than 90 per cent,” said O’Loughlin.

“It is important that telcos remain vigilant about protecting their customers through these verification processes.”

Telstra blocked customers from porting their numbers

It seems Telstra just can’t get a handle on number porting.

Earlier this month, the company paid an infringement penalty of more than $1.5 million. This was after an ACMA investigation that found the telco stopped number porting in late March 2020.

The result was that Telstra customers who wanted to leave for another provider couldn’t do so without giving up their mobile number.

The telco blamed COVID-19 for the disruption that eventually impacted 42,000 services. It didn’t resume porting operations until July, and didn’t clear the backlog of requests until October.

“It is clear Telstra, for a sustained period, did not have sufficient plans in place to comply with an important consumer safeguard that promotes competition in the telco market,” said O’Loughlin at the time.

“Australian consumers must have the freedom to change their telco provider to take up services that best suit their needs. This includes keeping your own phone number even if you take your business elsewhere.”

More reading

• 2 ASX dividend shares that could offer yields of 5% or more today
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• Forget Dogecoin! Here are 2 ASX dividend shares to buy for income today
• Why is the Telstra (ASX:TLS) share price falling today?

The post Telstra (ASX:TLS) slammed for enabling identity theft appeared first on The Motley Fool Australia.

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The Bitcoin (CRYPTO: BTC) price is up 12% over the past 24 hours.

That will come as welcome news to crypto investors, who watched the world’s largest token by market cap tumble more than 30% on Wednesday.

Leveraged investors, in particular, may have noticed a few more grey hairs following the slide. Depending on your gearing level, a fall of 30% can mean you’ve not only lost all of your investment…you’ve lost a lot more.

One Bitcoin is currently worth US$41,711 (AU$53,476).

While that’s well up from the near US$30,000 trough it dipped to on Wednesday, it’s still 19% below the price last Saturday. And well below mid-April’s all-time high of US$64,830.

Why the big price crash?

Analysts are pointing to a number of factors combining to drive the Bitcoin price lower over the past week.

First, the digital token’s skyrocketing price over the 12 months through 14 April this year was already looking overheated and ready for a retrace. Remember, as recently as 15 March 2020 Bitcoin was trading for as little as US$5,300.

Second, the United States Treasury is threatening to wrap all cryptocurrencies in some serious red tape. The Treasury is pressing for businesses to report any crypto transactions in excess of US$10,000. In other words, less than a quarter of one Bitcoin.

Third, and likely the primary driver for this week’s huge crash and subsequent bounce back, is leverage. The big exchanges now offer eye-watering levels of leverage to both institutional and retail investors, sometimes exceeding 100-times your actual investment.

According to Vijay Ayyar, head of Asia Pacific at Luno Pte (quoted by Bloomberg):

What causes such deeper pullbacks are a case of system overload, liquidations, and such factors. Crypto is still a much ‘wilder West’ than any other asset class where you can trade on some exchanges for up to 50-100X leverage. [And] what we’ve seen is a big funding reset across exchanges due to overleveraged traders.

Martin Green, CEO at crypto fund Cambrian Asset Management, added, “The selloff was greatly exacerbated by a lot of leverage. Now that the excess leverage has been liquidated, we have seen longs and leverage starting to be placed once again.”

Justin d’Anethan, sales manager at crypto exchange EQUOS, (run by Diginex) said, “You got all those bearish news and eventually you hit the point where a lot of the leveraged positions were getting liquidated. When that happens, it’s just a cascading fall.”

What’s next for Bitcoin?

No one can say for sure whether Bitcoin will soar to new record highs once more or fall to single digits.

Making the bullish case is Steve Ehrlich, chief executive officer of the cryptocurrency brokerage Voyager Digital (quoted by CoinDesk), “Crypto is here to stay and the volatility we’re currently witnessing is creating an attractive entry point to add to and create new positions.”

Sounding a note of caution is Jean-Marc Bonnefous, managing partner of investment firm Tellurian Capital, “There are definitely still some downside risks left short term, and markets rarely rebound in one single move up. Political noise, with news of tax rules tightening, is still weighing on a prompt recovery.”

Whether you’re bullish or bearish on the outlook for Bitcoin, think twice before making any leveraged bets on the next price moves.

More reading

• Bitcoin bounces back, but is it smooth sailing from here?
• Forget bitcoin, why it might be time for gold to shine
• Crypto crash sends Bitcoin 30% lower to under US$40,000
• Bitcoin price woes continue as China cracks down on cryptocurrency
• 56% of Aussies think Elon Musk invented Bitcoin

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