Bitcoin dropped below $37,000 Tuesday after briefly hitting $40,000 Monday.
The increase followed news reports that Amazon.com Inc. would accept cryptocurrencies as payment on its e-commerce websites and stores. Bitcoin's price fell after Amazon denied the reports Tuesday.
Bitcoin was last trading Tuesday at $37,111.94 each to the dollar - down about 4%. Competitor Ethereum was last at $2,209.12 - or off 6.79%. Other popular cryptocurrency offerings were down: Binance Coin was at $305.32, down 5.41%; XRP was at $0.63, or down 6.06% and Dogecoin was down almost 11% at $0.20, according to Crypto.com.
On Monday, several reports alleged that Amazon could be planning to integrate cryptocurrencies into its payment system. The assumption was made based on a job posting on the company's website for a "digital currency executive" position.
The job opening was for an executive that would be responsible for overseeing the company's "digital currency and blockchain strategy." Analysts were quick to assume that the posting may indicate Amazon's eventual plan to accept Bitcoin and other cryptocurrencies as a payment method.
The news quickly sent Bitcoin prices up by as much as 17% Monday to a high of $40,545 per coin - the highest since mid-June. According to Bybt.com, more than $950 million worth of cryptocurrency shorts were liquidated because of the surge.
"Shorts were piling up as we were moving down, assuming we were looking at a minimum of $25,000, which was expected across the board. But then there was heavy accumulation in the $29,000 to $30,000 region which caught a lot of those shorts unaware and hence led to the spring upward," analysts at cryptocurrency exchange Luno said.
On Tuesday, an Amazon representative denied that the company was planning on accepting cryptocurrencies as payment this year. The announcement immediately caused Bitcoin prices to plunge to $37,598. Bitcoin prices fell further throughout the day. The world's largest cryptocurrency is now trading at around $36,980 per coin. Rival coins such as Ethereum and Litecoin also tumbled.
Since mid-May, the cryptocurrency market has been stuck in a rut. Investor interest in the digital asset somewhat dissipated after China announced sweeping new rules as part of its nationwide cryptocurrency crackdown.
Analysts said the surge Monday brought some life back to the market, which has been stuck in the doldrums for months.
"It is exciting to see Bitcoin rally 10% overnight. However, investors should proceed with caution and avoid overtrading, noting that the liquidity is still relatively low as we are heading into the holiday season," analysts at digital asset hedge fund ARK36 said.
