After China reiterated its warning that it intends to crack down on cryptocurrency mining as part of controlling financial risks, Bitcoin resumed its sell-off on Friday.
As of 11:11 am New York time, the largest cryptocurrency fell 4.8% to $38,165. The statement issued by the Financial Stability and Development Committee late on Friday after a meeting was the latest blow to the cryptocurrency market during a difficult week due to forced selling and possible US actions Caused by tax cuts.
China has long expressed dissatisfaction with the anonymity provided by Bitcoin and other encrypted tokens and warned earlier this week that financial institutions are not allowed to accept their payments. The country has a large number of global crypto miners or programmers who use large amounts of computing power to verify transactions on the blockchain.
Former supporter Elon Musk made a face-to-face attack and criticized the energy consumption of the token. Friday’s sell-off hit Bitcoin believers. Bitcoin has fallen by about 20% since last Friday, despite its plunge from Wednesday to $30,000. Other coins have also plummeted-Ether has fallen by about 35% in the past seven trading days.
Musk’s suspension of accepting Bitcoin payments at Tesla Inc. and using cryptocurrency boosters for barb transactions on Twitter started to trigger an unfavorable situation for digital tokens. The Central Bank of China increased the funds on Tuesday after issuing a statement warning against the use of virtual currencies. On Thursday, news broke that the United States may require reporting of crypto transactions of $10,000 or more to tax authorities.
Ben Emmons, managing director of global macro strategy at Medley Global Advisors in New York, said: “Bitcoin’s volatility will continue to increase.” replace.
Friday’s sell-off once again pushed Bitcoin down to the average price of the past 200 days. For some chart analysts and technical analysts, Bitcoin may continue to fall to around $30,000, where it found support earlier this week. .
At the same time, this week’s volatility has led to massive liquidation by leveraged investors and undermined claims that cryptocurrencies will become more stable as the industry matures. Musk’s actions show that a few tweets can still disrupt the entire market.
Nevertheless, in a longer period of time, tokens such as Bitcoin and Ether have still made huge gains. In the past year, Bitcoin has risen by about 300% and Ethereum has risen by about 1100%.
Regulatory threat
One of the gains in the past few days is the reiteration of the regulatory threat to the crypto market.
“Investors underestimated the regulatory risks of cryptocurrencies because the government defended their profitable monopoly on currencies,” said Jay Hatfield, CEO of New York Infrastructure Capital Advisors. He said that the possible imposing of transaction reporting requirements could be the potential “tip of the iceberg” of the U.S. Treasury’s rules on virtual currencies.
The Bloomberg Galaxy Cryptocurrency Index is expected to fall by more than 30% every week, the highest level since the market turmoil since the pandemic last year.
Despite the downside risks and the turbulence this week-Bitcoin fell about 31% on Wednesday and rose by roughly the same rate on Wednesday, cryptocurrency bulls are not an exaggeration.
They insist on the statement that Bitcoin provides modern portfolio hedging and value storage similar to digital gold and silver, and blockchain-based financial services (so-called decentralized finance) are expanding.
Paolo Ardoino, the chief technology officer of the cryptocurrency exchange Bitfinex, wrote in a report on Thursday: “The opportunity for institutional investors to acquire digital gold will not disappear anytime soon.” “Decentralized finance. Will continue to grow. Developers will continue to build.”
(Update price, add 200-day moving average)
-With the assistance of Kenneth Sexton.