Early Tuesday, bitcoin’s value went back to pre-2021 levels, dropping below $30,000 for the first time since June. It also brought down the value of other cryptocurrencies. As a result, the crash wiped around $98 billion off the entire crypto market within 24 hours.
Bitcoin Value Down, Other Cryptocurrencies Down As Well
Bitcoin, which continues to experience a rough slide since May this year, lost more than 6% yesterday. Other cryptocurrencies are also on the downtrend, including Ether (-9%) and XRP (-10%), according to CoinDesk.
This time, the plunge in bitcoin value came after global stock markets sold off last Monday. The Dow Jones Industrial Index experienced its worst trading day since October last year.
“There’s been a broad sell-off in global markets, risk assets are down across the board,” Annabelle Huang, Amber Group partner, said. “Concerns of the quality and strength of economic recovery” and “broader risk assets turned weaker including high yields” are bringing bitcoin value down. “Coupled with recent BTC (bitcoin) weakness, this just sent the crypto market down further,” she added.
China Crackdown Also To Blame
Meanwhile, a new crackdown in China on cryptocurrency trading and mining practices is now affecting bitcoin value negatively. Local governments are shutting down bitcoin mining operations across various regions.
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Mining for bitcoins requires a lot of electricity, and many regional governments are shutting the power off these energy-hungry operations.
At the same time, the Chinese central bank reminded finance and fintech companies not to provide crypto services to their customers. Since 2017, the Chinese government has banned local cryptocurrency exchanges from transacting in the country.
Instead, Chinese traders had to make do with transacting in offshore exchanges. However, the crackdown on operations this year may prove enough for these traders to consider shutting down.
Bitcoin Value To Continue To Go Down
Kinetic Capital founder Jehan Chu expects the plummet in Bitcoin value to continue. “All signals are red as BTC (bitcoin) continues to be weighed down by China’s ultimate crypto ban and worsening macroeconomic conditions from a surge in covid variants,” he said.
Meanwhile, many country regulators are also looking into crypto operations. Binance, the world’s largest cryptocurrency exchange, received word from the United Kingdom that they’re no longer welcome to operate there.
In addition, regulators from Japan, Canada, and Thailand are also issuing warnings about the crypto exchange. “In general we’re seeing more regulatory focus on crypto and bitcoin,” said Vijay Ayyar, head of business development at Luno.
Selloff To Continue If Bitcoin Value Continues To Fall
Ayyar said that bitcoin value can fall further between $22,000 to $24,000. Afterward, the cryptocurrency can trade in a range. Ayyar said he expects bitcoin to flourish between $20,000 to $40,000 before any semblance of normalcy returns.
Chu also shares the same sentiment. “Q1′s crypto market momentum has stalled and is threatening further reversal potentially below the $25K levels,” he said.
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