Crypto investors woke up in a red sea this morning as the entire market took an absolute hit overnight for the second time in just a few weeks.
Bitcoin price fell sharply overnight, nearing a dreaded $ 30,000 ($ 38,800) threshold it hasn’t exceeded since January, dragging other cryptocurrencies with it.
At around 2 a.m., Bitcoin fell 8.6 percent to a value of $ 31,501 ($ 40,715), a level not seen since mid-May when the volatile cryptocurrency temporarily lost 30 percent in one session.
The second largest cryptocurrency, Ethereum, lost 11.2 percent of its value, falling to $ 2,361.
Bitcoin’s value has rebounded slightly since the decline, rising to $ 33,738 ($ 43,606) around 7 a.m. today – but across the board, almost all of the smaller cryptos were hit overnight.
The Bloomberg Galaxy Crypto Index fell as much as 15 percent before making up for losses by this morning. Altcoins like Ether, Litecoin and EOS have also fallen.
“Numbers that should be staggering for a single day’s performance are no longer a shock to those of us who have invested in the crypto universe,” said Hugh Shields, an analyst at SpreadEx.com, calling the market a ” Anomaly”.
No specific reason seemed to explain Tuesday’s price drop, but some analysts pointed to the US authorities’ seizure of $ 2.3 million ($ 3 million) in Bitcoin from the darkside hackers as a possible factor down.
CONNECTED: Donald Trump calls Bitcoin a “fraud”
The US managed to get back almost all of the Bitcoin ransom paid to the perpetrators of the cyber attack on the Colonial Pipeline last month.
The FBI was able to find the bitcoin by uncovering the digital addresses the hackers used to transfer the funds.
It’s seen as a sign that law enforcement has the ability to track down online criminals even when they operate outside of the country’s borders – and that crypto is not beyond government control.
“The moves by governments around the world to regulate the crypto space … are causing waves of concern,” analysts at Hargreaves Lansdown said.
While the FBI’s ability to track and recover cryptocurrencies contradicts the whole decentralization dream of introducing Bitcoin, others see the development as potentially positive for cryptocurrencies in the long term and as a step towards wider adoption of the coin.
However, things are not looking good for crypto investors in the short term.
“Bitcoin can’t take a break,” Antoni Trenchev, managing partner and co-founder of Nexo, a crypto lender, told Bloomberg.
“The big picture that we are experiencing here is a protracted regulatory overhang that will continue to weigh on the Bitcoin price.
“Ultimately, it’s good for the industry – and crypto needs the right regulation – but for short-time workers out there, it’s probably best to look the other way.”
The sell-off could worsen if bitcoin prices drop below $ 30,000 ($ 38,800), according to Jeffrey Halley, senior market analyst for the Asia-Pacific region at Oanda.
Breaking below this barrier would “basically drive every long position since Jan. 1 into the red, which I believe will trigger another surrender trade,” he wrote in a research note.
Cryptocurrencies have also been put down by former US President Donald Trump who describes Bitcoin as a “fraud” that was “competing with the dollar” during an appearance on Fox Business television.
Since late 2020, Bitcoin price has been propelled by the interest of professional investors, from mutual funds to large Wall Street banks. The electric vehicle manufacturer Tesla has also invested some of its money inside.
Bitcoin price soared nearly 800 percent between the beginning of last year and a mid-April high of $ 64,870 ($ 83,822). But since then, the cryptocurrency has lost more than 50 percent of its value.
The volatility worries some investors. The British fund Ruffer, which invested in Bitcoin in November, caused a sensation.
But the fund said Monday it had ditched its cryptocurrencies and made $ 1.1 billion in profit in the process.
“Something like Dogecoin is still valued at $ 40 billion” [$A52 billion]”Said Duncan McInnes, an investment director FT about the sales decision.
Dogecoin, which was created as a parody cryptocurrency, is, however often sponsored by billionaire Tesla boss Elon Musk, had an even more turbulent year than Bitcoin. The price rose from less than 10 US cents (13 cents) in January to nearly 70 cents (90 cents) in May. It is currently trading at around 31 cents (A40 cents).
– with AFP