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Data website CoinMarketCap cited https://coinmarketcap.com/headlines/news/chinas-xinjiang-blackout-and-bitcoin-hashrate-correction-caused-btc-price-crasha blackout in China’s Xinjiang region, which reportedly powers a lot of bitcoin mining, for the selloff.

Luke Sully, CEO at digital asset treasury specialist Ledgermatic, said in an email that people "may have sold on the news of the power outage in China and not the impact it actually had on the network".

"The power outage does expose a fundamental weakness; that although the Bitcoin network is decentralized the mining of it is not," Sully added.

The dollar looks set to post a second-straight weekly decline Friday, shrugging off a wave positive data earlier this week, and will continue to do so as most of the good news has already been priced in, Commerzbank (DE:CBKG) said.

The U.S. dollar index, which measures the greenback against a trade-weighted basket of six major currencies, fell by 0.01% to 91.55.

Data earlier this week including retail sales and initial jobless claims surprised to the upside, but that drew little support to the dollar. The humdrum reaction suggests "the positive effect of Biden’s economic stimulus package and good vaccination progress in the US is largely priced in," Commerzbank said. "Strong U.S. data can no longer support the U.S. dollar."

With most of the strong data and positive vaccine news now priced in, the greenback will struggle to make gains in the short-term.