Bitcoin slides below $40,000 after China’s fresh curbs on crypto transactions
Bitcoin tumbled below the $40,000 mark on Wednesday to a three-and-a-half month low and dragged down the prices of other digital coins after China imposed fresh curbs on transactions involving cryptocurrencies.
Bitcoin, the biggest and best-known cryptocurrency, had already been under pressure from a series of tweets from Tesla boss Elon Musk, but the news from China sent it as low as $38,514, for a 9 percent fall.
For the latest headlines, follow our Google News channel online or via the app.
By 0855 GMT, it had recovered to $40,627, still down 5 percent on the session.
The cryptocurrency has tumbled nearly 40 percent from a record high of $64,895 hit on April 14. It is also heading for its first monthly decline since November 2018.
Bitcoin’s decline whacked other crypto assets on Wednesday, with Ether, the coin linked to the ethereum blockchain network, falling 12 percent to $2,988, while meme-based dogecoin tumbled 18 percent, according to market tracker Coingecko.
Shares in the crypto exchange Coinbase slumped 4 percent in pre-market trading. Coinbase shares have lost 45 percent of their value from the peak hit on the day of their direct listing in April to Tuesday’s close.
Cryptocurrency declines last week were sparked by Musk’s reversal on Tesla accepting bitcoin as payment. His subsequent tweets caused further confusion over whether the carmaker had shed its holdings of the coin.
Selling was exacerbated by China’s announcement on Tuesday banning financial institutions and payment companies from providing services related to cryptocurrency transactions. It also warned investors against speculative crypto trading.
“The crypto markets are currently processing a cascade of news that fuel the bear case for price development,” said Ulrik Lykke, executive director at crypto hedge fund ARK36.
“News like this can get a lot of traction and easily stir market sentiment but they often prove of little significance in the long term. The crypto markets are extremely emotionally driven and their participants are prone to overreacting to events they perceive as negative.”
However, some cryptowatchers predicted more losses ahead, noting the fall below $40,000 represented a breach of a key technical barrier which could set the stage for more selling in the short-term at least.
Inflation hedge
More importantly, investors may be shifting from bitcoin back to gold, analysts at JPMorgan said, citing positioning data compiled on basis of open interest in CME bitcoin futures contracts.
This shows “the steepest and more sustained liquidation” in bitcoin futures since last October, they told clients, adding: “the bitcoin flow picture continues to deteriorate and is pointing to continued retrenchment by institutional investors.”
The selloff in crypto assets at a time when inflation fears are in the ascendancy hurts the idea of the asset class acting as an inflation hedge.
Instead, more traditional hedges have been gaining ground, with gold up almost 6 percent so far this month.
The recent selloff in bitcoin and other digital currencies has taken market capitalization of all cryptocurrencies back under $2 trillion, down from the recent $2.5 trillion record.
Read more: Bitcoin still struggling after partial market recovery following Musk’s Tesla U-turn
-
Bitcoin still struggling after partial market recovery following Musk’s Tesla U-turn
Bitcoin recovered about half of its losses on Thursday, a day after plunging 17 percent when Tesla boss Elon Musk said his company would stop ... Technology -
Tesla stops accepting bitcoin for car purchases: Elon Musk
Tesla Inc will no longer accept bitcoin for car purchases, Chief Executive Elon Musk said on Wednesday, citing long-brewing environmental concerns for ... Financial Markets -
Sotheby’s to accept bitcoin, ethereum for Banksy iconic artwork up for auction in NY
Sotheby’s said on Tuesday it would accept bitcoin and ethereum as payment for Banksy’s iconic artwork “Love is in the Air,” a first for a physical art ... Technology -
Bitcoin extends gain on reports of JPMorgan fund
Bitcoin soared nearly 10 percent on Monday, after five straight days of losses, on reports that JPMorgan Chase is planning to offer a managed bitcoin ... Economy -
Wall Street starts to see weakness emerge in Bitcoin’s trading charts
Bitcoin has yet to recover from its unexplained weekend swoon, and now the investing public is on edge about the notoriously volatile token’s next ... Financial Markets -
Bitcoin slumps 14 percent as pullback from record gathers pace
Bitcoin, the world’s biggest cryptocurrency, fell as much as 14 percent to $51,541 on Sunday, reversing most of the big gains it made over the past ... Financial Markets