Bitcoin falls below $30,000 and heads towards a new low for the Year.
- Bitcoin fell below $30,000 for the first time since June. 22 other digital currencies are lower.
- According to CoinDesk data, bitcoin has risen 2% despite the plunge.
This article explains.
- BTC.BS=USS+513.15 (+1.62%).
This illustration, taken May 19, 2021, shows a representation of Bitcoin in front of a stock chart.
Bitcoin’s value fell below $30,000 Monday night, its lowest point since June. 22 dragging along other digital coins.
Coin Metrics reports that Bitcoin trades in $29,000, which is 3% lower than the previous day. Ether dropped by 1.25%, while XRP fell 4%. CoinDesk data shows that bitcoin has increased 2.3% in the last year, despite the plunge. Both Ether and XRP both have increased by approximately 140% in the past year.
According to Forbes, the New Jersey Attorney General issued an Order to Cease and Desist BlockFi’s New Jersey-based crypto service firm BlockFi. The order directed it to cease offering interest-bearing accounts and was later confirmed by the CEO of Twitter. BlockFi allows users the ability to borrow and store their cryptocurrencies, but not dollar-based loans. This news came after a lawsuit was filed by the Securities and Exchange Commission against Blockfi and its founder. It alleges that the company misled investors.
Analysts also stated that institutional investors have been waiting to enter the market while they make sure the Securities and Exchange Commission does not consider cryptocurrencies securities.
The head of the SEC stated earlier this month that his agency is “very concentrated” on whether digital asset schemes comply with federal securities laws. Jay Clayton, Chairman of the SEC, warned investors about pump-and dump schemes involving cryptocurrencies or initial coin offerings (ICOs) in July.
It also occurred after a huge sell-off on global stock markets Monday. The Dow Jones Industrial Average suffered its worst day since October last year, but the needs have recouped much of their losses Tuesday.
Annabelle Huang, a partner at Amber Group, said that there has been a large sell-off on global markets and that risk assets have fallen across the board.
Huang said that there were “concerns over the quality and strength of economic recovery” and that “broader risks assets have become weaker, including high yields,” Huang further stated. Combining this with recent BTC (bitcoin) weakness, the crypto market just went further.
Multiple experts stated earlier that Bitcoin’s lowest point would be around $3000, as reported by NewsBTC. Some believe that if this happens, a low of $2000 could be possible.
BTC and ETH: Last support at $28500, 23500 satoshis, respectively.
In just 24 hours, $89 billion was wiped off the cryptocurrency market. This happened Tuesday morning. Bitcoin’s April record-breaking $65,000 price has caused its value to plummet by just 50%.
The bitcoin price has been affected by a renewed crackdown in China on cryptocurrency mining and trading.
Major regions responsible for Bitcoin mining in China were made to cease operations. Bitcoin mining is an energy-intensive process that facilitates transactions. It creates new coins.
China’s central bank also spoke to fintech and finance companies, reminding them to stop offering crypto-related services.
China banned local cryptocurrency exchanges in 2017, forcing them to move offshore. This did not stop Chinese traders from buying and selling digital currency. The Chinese regulators, however, took severe measures to tighten restrictions on trading and mining this year.
“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.
“Due to regulatory uncertainty and macro headwinds, we don’t see BTC or any other major alts recovering USD value.”
Coinbase was a popular U.S.-based market for trading cryptocurrencies. However, customers sued the company after it listed bitcoin cash (BCH).
Many market analysts believe that the decision to not support ETC (Ethereum Classic), will do more harm than good. It could cause disillusionment among its customers who have supported hard forks following disagreements with developers in different projects, such as Bitcoin Cash or Ethereum Classic.
Why does Bitcoin consume so much energy?
The crypto space is also being scrutinized more by regulators around the globe.
The U.K. has banned Binance, the largest cryptocurrency exchange, from engaging any regulated activity within the country. Binance has also been warned by Canada, Japan, and Thailand.
Vijay Ayyar is the head of business development at Luno’s cryptocurrency exchange. He stated that “in general, we’re seeing greater regulatory focus on crypto- and bitcoin.” “Markets are volatile but I believe the chances of a significant correction increase if/when regulatory risks are realized.
“We are concerned that some of the claims made will confuse our customers.” Exchanges must be open about what they do, and not pretend to be on one side or the other of this debate.
Recent values have risen significantly in the top three digital currencies.
Emerging market issues
Due to rising interest rates and the rise in oil prices, emerging market economies are facing severe economic downturns. Over the last week, fuel prices in Brazil, India and Indonesia have risen. This has resulted in lower consumer spending.
The volatility of global markets has also been evident, as crude oil prices rose on Tuesday. Higher fuel prices have increased the risks of economic growth in emerging markets economies.
This could result in central banks raising interest rates to stop a further slowdown of their economies. Ponder says this could lead to the U.S. Dollar strengthening and emerging market currencies falling.
“My feeling is that we’ll see a volatile cryptocurrency marketplace ahead with risks tilted toward further weakness,” stated Jacob Pouncey (director of trading at London Capital Group), a City of London brokerage that offers cryptocurrencies through its spread-betting platform.
“These moves could have been driven by fear as well as exuberance. Investors will continue to be in the dark until we receive more concrete regulatory information. This makes them vulnerable to negative news that could drive the market down.
Analysts argue that regulation will not necessarily harm cryptocurrencies. Instead, governments need to be vigilant in order for them to prevent fraud and theft from their trading networks.
Kedian stated that regulations could increase the popularity of cryptocurrencies as a payment method. It would be a great help to Southeast Asia if Singapore regulated bitcoin trading and enforced Know-Your-Customer rules.
He said, “People need to be sure their money is safe.”
Are you ready for more selling?
According to Ayyar who stated that Bitcoin’s drop below $30,000 could have significant consequences, the sell-off could continue to the $22,000 to $24,000 mark.
Bitcoin could then trade across a variety of currencies.
Ayyar stated, “I would like to see bitcoin between 20-40K ($20,000-$40,000) for a while before any bullishness comes back.”
Kinetic Capital’s Chu sees potential for selling ahead.
Chu stated that Q1’s crypto market momentum had stalled and was threatening to reverse, potentially below the $25K level. “Further downside risk are likely to emerge prior to any sustained bottom being called.”
Bitcoin cash fell on Tuesday for the first-time in five days. According to CoinMarketCap, the digital currency fell 5% to $1.507.94 at 7 :15 AM London time (3:15GMT), continuing its recent sell-off.
The value of bitcoin and digital currencies has risen by more than three times since 2018, with bitcoin’s price more than tripling since 2018. There are concerns that bitcoin may be in a bubble. Bitcoin’s rise of 280% this year is nearly three times that of its 109% increase in 2017.
In the last six months, digital currencies have more than doubled in value to $320 billion, including bitcoin and ethereum.
Chu of Kinetic Capital stated that “until these cryptocurrencies can rally around with some common purpose their prospects will still remain very limited.” “Digital assets as an entire group must undergo another correction which could easily bring the nascent investor pool back to reality.”
Coinbase, a digital currency exchange, said Tuesday that it was investigating a security breach following reports that some users might have their cryptocurrency stolen.
Despite the crash at least one analyst remains optimistic for the long-term.
“Our view remains unchanged: we see cryptocurrency as new asset type that will change how we invest, trade, and use money,” Jenifer Jang, a Singapore-based analyst, stated. Jenifer Jiang has 12-months price targets to bitcoin, ethereum, and litecoin.
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