Bitcoin fell again on Friday after China reiterated the warning it intended to crack down on cryptocurrency mining, in what has been a tough week for crypto investors.
Bitcoin resumed sales on Friday after China reiterated a warning that it intended to crack down on cryptocurrency mining as part of an effort to control financial risks.
The largest cryptocurrency fell 4.8%, to $ 38,165, at 11:11 a.m. in New York. The statement late Friday after a meeting of the Financial Stability and Development Committee marked the last time in a tough week for the cryptocurrency market, sparked by forced sales and a possible U.S. tax cut.
For a long time, China has expressed dissatisfaction with the anonymity provided by Bitcoin and other cryptocurrencies and warned earlier this week that financial institutions were not allowed to accept payment. In the country there is a large concentration of cryptographic miners in the world, or programmers who use massive computing power to verify transactions in the blockchain.
Friday’s sales hit Bitcoin believers still smoking after advocate Elon Musk himself took an approach and criticized the listing for its energy use. Bitcoin has fallen about 20% since last Friday, though it went from Wednesday to $ 30,000. Other currencies have also fallen: Ether has fallen about 35% in the last seven sessions.
The sour stretch for digital tokens began with Musk, who suspended acceptance of Bitcoin payments to Tesla Inc. and traded barbs with cryptocurrency boosters on Twitter. China’s central bank was added to the declining account on Tuesday after filing a statement warning against the use of virtual currencies. On Thursday, it emerged that the U.S. could demand that cryptocurrency transactions of $ 10,000 or more be forwarded to tax authorities.
“Bitcoin’s volatility is staying high,” said Ben Emons, CEO of global macro strategy at Medley Global Advisors in New York. The leverage that was undone in Wednesday’s fall is already being replaced, he added in a note.
Friday’s sale pushed Bitcoin below its average price again over the past 200 days, which for some charts and technical analysts suggests it could tend to fall to $ 30,000, where it found support earlier this week.
Meanwhile, the changes of the week caused huge liquidations by leveraged investors and damaged the narrative that cryptocurrencies will stabilize as the sector matures. Musk’s shares showed how some tweets can still sink the entire market.
However, over a longer time horizon, tokens like Bitcoin and Ether are making big gains. Over the last year, Bitcoin has increased by approximately 300% and Ether by approximately 1,100%.
One of the takeaways of the last few days is the reiteration of the regulatory threat to the crypto market.
“Investors are underestimating the regulatory risk of cryptocurrency as governments defend their lucrative monopolies over the currency,” said Jay Hatfield, CEO of Infrastructure Capital Advisors in New York. The possible imposition of transaction reporting requirements could be the “tip of the iceberg” of possible Treasury rules on virtual currencies, he said.
The Bloomberg Galaxy Crypto index is forecast for a weekly drop of more than 30%, the highest since the market turmoil that accompanied the outbreak of the pandemic last year.
Despite this week’s downside risks and volatility (which saw Bitcoin shrink by about 31% and jumped roughly the same percentage on Wednesday), cryptocurrencies are not afraid.
They adhere to the narrative that Bitcoin offers current portfolio coverage and a store of value, similar to the digital bullion, and that blockchain-based financial services (so-called decentralized financing) are expanding.
“Institutional investors who are exposed to digital gold will not disappear any time soon,” wrote Paolo Ardoino, Bitfinex’s cryptocurrency exchange technology director, on Thursday. “Decentralized finance will continue to grow. Developers will continue to build. “
(Update prices, add a 200-day moving average)
–With the assistance of Kenneth Sexton.