Bitcoin (BTC) suffered its biggest drop in seven years, as fears over the spreading coronavirus triggered a new wave of selling in everything from stocks and junk bonds to cryptocurrencies. This came despite a new European Central Bank pledge to pump more cash into panicky markets.  

Prices for the largest cryptocurrency by market value plunged 26 percent to $5,863 as of 13:54 UTC (9:54 a.m. Eastern time). The move wiped out bitcoin’s gains for the year, dropping prices to the lowest level since May 2019. At least for now, it has undermined the investment narrative that the cryptocurrency was starting to become a safe-haven asset similar to the traditional-market alternatives of U.S. Treasury bonds and gold.

“You’re getting to a point where markets are pretty frantic across the board, and today is a move toward cash,” said Kevin Kelly, lead analyst at the cryptocurrency-analysis firm Delphi Digital in New York. “Bitcoin and crypto in general still very much sit further out the risk curve in investors’ minds.”

Just overnight, bitcoin’s market capitalization slid by nearly $40 billion to about $107 billion, according to CoinMarketCap.com, a data provider. 

The stocks tumbled the day after President Donald Trump ordered a 30-day ban on visitors from Europe, to start later this week. The S&P 500 Index of U.S. stocks slid 7.7 percent.

Investors appeared to seek safety in U.S. Treasuys, with yields on the 10-year note dropping by 0.15 percentage point to 0.67 percent, close to a historic low. Bond yields fall when prices rise. 

A widely anticipated meeting by the European Central Bank, led by President Christine Lagarde, did little to assuage investors’ anxiety, even as the monetary policymakers approved plans to pump liquidity into markets, with a pledge to buy an additional 120 billion euros ($134 billion) of bonds and assets over the rest of the year. However, the ECB did not cut interest rates. 

Thursday’s sell-off in bitcoin extended across the cryptocurrency landscape, with ether (ETH), XRP (XRP) and litecoin (LTC) each tumbling in synch. 

“If bitcoin's going to sell off by 25 percent, everything that is even more speculative is going to sell off as well, and that’s what you're seeing today among the major digital assets,” said Greg Cipolaro, co-founder of Digital Asset Research, a cryptocurrency analysis firm in New York. 

Bitcoin’s price decline led to the liquidation of more than $700 million of futures contracts and other leveraged positions on BitMEX, a cryptocurrency exchange based in Seychelles, according to the research firm Skew. 

Denis Vinokourov, head of research at the London-based digital-asset firm Bequant, said at least $500 million of bitcoin futures contracts had been liquidated on cryptocurrency exchanges, leading to additional selling pressure and exacerbating the price decline. 

The most-recent data from the Chicago Mercantile Exchange showed traders categorized as “other reportables” — those that aren’t classified as asset managers or leveraged funds — had become “long,” or unusually loaded up on contracts designed to profit from price increases.

“We were due for a bit of a squeeze,” he said.  

With reporting assistance by Omkar Godbole.