Bitcoin and cryptocurrency prices have suddenly crashed lower, falling sharply after weeks of malaise.
The bitcoin price dropped under the closely-watched $30,000 per bitcoin level as smaller cryptocurrencies including ethereum, Binance’s BNB, cardano, Ripple’s XRP and the meme-based dogecoin recorded double-digit percentage losses, wiping away $200 billion in value over the last week.
The sudden bitcoin and crypto move lower coincides with a global stock market sell-off yesterday that saw the Dow Jones Industrial Average post its biggest one-day point drop since October as fears mount the highly contagious Covid-19 Delta variant could set back economic recovery efforts.
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Among the crypto top ten by value, etheruem rivals BNB and cardano led the market lower with a more-than 10% sell-off while ethereum itself was around 8% lower. Ripple’s XRP, currently in the midst of a legal battle with the SEC, was some 10% lower, with Tesla billionaire Elon Musk’s pet project dogecoin off by 7%. The bitcoin price was down by just over 6%, adding to loses of 10% this past week.
“Bitcoin’s swing range has declined recently, forming the basis for a powerful exit with a compressed spring effect,” says Alex Kuptsikevich, senior financial analyst at FxPro, who warned the bottom could be about to fall out of the bitcoin and crypto market.
“A sequence of increasingly lower highs is a significant selling factor. Given the fear-of-missing-out nature of cryptocurrencies, a prolonged consolidation is increasingly frustrating for speculators. The main question now is whether bitcoin fall to the levels near $23,300, where it paused before last Christmas. We cannot rule out that with massive liquidation of margin positions the price will even close the gap at $18,000. Overall, such a reversal would be a repeat of the 2018 so-called crypto winter, opening the possibility for a price collapse toward a bottom near $10,000, nullify the rally since October 2020.”
The bitcoin price, having tested the $30,000 level repeatedly over the last few weeks, appears to have been spooked by a cease and desist order that was issued to New Jersey-based bitcoin financial services platform BlockFi by the New Jersey Office of the Attorney General and the Bureau of Securities last night.
The story, first reported by Forbes, triggered a wave of selling as investors feared this could be part of a wider crackdown on the myriad of crypto lending platforms that have sprung up over the last couple of years. BlockFi offers interest rates to depositors between 0.25% and 8.5% depending on the crypto asset and deposit size.
The regulatory action is the latest in a string of blows to the bitcoin and cryptocurrency market that began with China’s latest crackdown on crypto miners—who secure cryptocurrency blockchains with high-powered computers in return for freshly-minted tokens—in April. Since then, major crypto exchange Binance has seen a wave of pressure from regulators around the world, with many warning against investors using the platform.
Meanwhile, U.S. regulators have turned their attention to the booming stablecoin market that’s swelled to a $100 billion value over the last 12 months. Yesterday, Treasury secretary Janet Yellen met with various other government agencies to discuss how stablecoins should be governed.
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The bitcoin price, after soaring to around $65,000 per bitcoin in April from under $30,000 at the turn of the year, has tracked lower over recent weeks amid a drop off in crypto trading volumes that peaked around Coinbase’s red-hot Nasdaq debut in April.
“Bitcoin has found it challenging to move higher and the upper end of this range has been converging gradually,” Pankaj Balani, the chief executive of the Singapore-based Delta exchange, wrote in emailed comments. “Bitcoin failed above $36,000 last week and $33,000 this week. We have also continuously tested the bottom end of the above range which shows weakness in price and opens up the risk of a breakdown below $30,000.”
“Despite the amplitude of the crypto market’s swings being much smaller now than in May, the prolonged rise failure indicates that the sharp uptrend is broken, as it was in 2018,” added Kuptsikevich. “Long-term investors may remain bullish, but short-term speculators are clearly trying to leave the market.”