The sharp fall in Bitcoin and other cryptocurrencies is a series of negative news and catalysts.
The leading cryptocurrency fell to a low of more than three months on Wednesday. It dropped to $30,000, which is a decline of more than 30%. Ethereum (the primary token of the Ethereum blockchain network) also fell sharply. It dropped below $2,000 simultaneously and falling by more than 40% in less than 24 hours.
The recent decline is a reversal of the sharp rise in the second half of last year. Since September, the price of Bitcoin has still risen by more than 200%. It is a bull market rebound product that hedges fund managers, banks, and other companies.
Several factors that affected Bitcoin and crypto, generally
Earlier this year, Musk announced that he would purchase more than $1 billion in funds for his automaker’s balance sheet. Several payment companies announced that they are upgrading their capabilities to conduct more crypto operations. Central Wall Street banks also announced that they are beginning to build crypto trading teams for their customers. Cryptocurrency exchange company Coinbase went public through a direct listing in mid-April.
However, this positive background hasn’t really lasted long.
Musk announced last week that Tesla would no longer accept Bitcoin as payment, citing environmental issues.
Coinbase soared above $400 shortly after its first transaction on April 14. It quickly abandoned those gains and dropped by nearly $220 on Wednesday morning. Its direct listing date is also the highest day in Bitcoin history.
According to futures contracts, institutional investors appear to be switching from Bitcoin to gold. Bitcoin is often touted as a potential substitute for traditional metals as a store of value.
The government’s crackdown on cryptocurrencies may trigger another “crypto winter” and reduce transaction activity. In many developing countries, cryptocurrencies may be severely suppressed. These developing countries may regard cryptocurrencies as a threat to their legal tender and monetary system.
For example, China, which is developing its government-run cryptocurrency, reiterated its rules for other digital currencies on Tuesday. China is prohibiting financial companies from providing crypto trading services.