Bitcoin’s dream run hit a major road bump as it slid below the $40,000 mark for the first time since February.
One of the most well-known cryptocurrencies globally, Bitcoin’s tumble started when Tesla CEO Elon Musk made a U-turn and announced it will not accept Bitcoin in payments, citing environmental concerns created by cryptocurrency mining.
The volatile week saw Bitcoin fall below its 200-day moving average, signalling the possibility of a further correction.
In January 2020, the virtual coin crossed the $40,000-mark and skyrocketed after Tesla said it will start accepting Bitcoin payments soon. Tesla said it had invested $1.5 billion in the said cryptocurrency.
At the time of publishing this article, prices were down 13 percent while the coin had hit an intraday low of $38,940.04. In fact, Bitcoin is down 40 percent from its all-time high of $64,895.22.
‘Buy the dip’ investors are now warned by financial advisers to wait before investing, signalling a possible fall to $30,000 — Bitcoin’s next support level.
Ethereum — another popular cryptocurrency — is also down nearly 15 percent, trading at $2,94.72 on Wednesday. Its all-time high stands at $4,382.73.
Moreover, Bitcoin’s downfall can also be traced to China’s crackdown on cryptocurrencies.
On Tuesday, China confirmed that it is banning financial institutions and payment platforms from providing services related to cryptocurrency transactions.
The country has also warned investors against speculative cryptocurrency trading.
Earlier, in 2017, China shut crypto exchanges, and in 2019, said it will “block all access” to domestic and foreign crypto exchange websites.
Before 2017, China accounted for nearly 90 percent of Bitcoin trading and mining activities.
Meanwhile, the country is focussing on issuing its own digital currency to replace cash and maintain control over digital payments, which has, of late, been taken over by technology companies.
