The global cryptocurrency market saw almost $89 billion being wiped off in 24 hours on Tuesday, according to CoinMarketCap data, as the value of most digital coins being dragged down by bitcoin which dropped below $30,000 for the first time since June 22.
According to CoinDesk data, there was a more than 5 per cent drop in bitcoin while a more than 6 per cent drop in ether was seen on Tuesday with XRP falling by almost 9 per cent.
A big sell-off in global stock markets resulted in the plunge in bitcoin. Its worst day since last October was experienced on Monday by the Dow Jones Industrial Average.
“There’s been a broad sell-off in global markets, risk assets are down across the board,” Annabelle Huang, partner at cryptocurrency financial services firm Amber Group, said.
Huang said that there were “concerns of the quality and strength of economic recovery” and “broader risk assets turned weaker including high yields”.
“Coupled with recent BTC (bitcoin) weakness, this just sent crypto market down further,” Huang added.
The price of bitcoin has also been under pressure because of a renewed crackdown in China on cryptocurrency trading and mining. Chiense authorities have forced closures and shut down of some of almost all of the major regions responsible for bitcoin mining in China. An energy intensive activity, mining of bitcoin actually facilitates bitcoin transactions and creates new digital coins.
Finance and fintech companies of China have also been asked by China’s central bank to stop offering their customers crytpo-related services.
In 2017, the local cryptocurrency exchanges were banned in China which forced them to more out of the country. However, buying and selling digital coins was still done by Chinese traders. But this year, Chinese regulators have taken a tougher stance against cryptocurrencies as authorities sought to further tighten restrictions on trading and mining of digital currencies and assets.
“All signals are red as BTC (bitcoin) continues to be weighed down by China’s ultimate crypto ban and worsening macro economic conditions from a surge in covid variants,” said Jehan Chu, founder of cryptocurrency-focused venture capital and trading firm Kenetic Capital.
The crypto space is under the scanner of regulators around the world.
Authorities in the United Kingdom barred the largest cryptocurrency exchange of the world – Binance, from carrying out any regulated activities in the country.
Warnings about Binance have also need issued by regulators in Japan, Canada and Thailand.
“In general we’re seeing more regulatory focus on crypto and bitcoin,” said Vijay Ayyar, head of business development at cryptocurrency exchange Luno.
According to Ayyar, hedre copuld be importance consequences of bitcoin’s fall below $30,000 and added that the sell-off could go lower to test the $22,000 to $24,000 level.
From then on, bitcoin could trade in a range.
“I would see bitcoin between 20-40K ($20,000 to $40,000) for a while now before any bullishness returns,” Ayyar said.
More selling ion the near future is seen by Kinetic Capital’s Chu.
“Q1′s crypto market momentum has stalled and is threatening further reversal potentially below the $25K levels,” Chu said.
(Adapted from TheStandard.com.hk)