- Bitcoin has shed close to 15 percent in the past 24 hours, dropping to below $39,000 which is its lowest in the past three months.
- This comes after three Chinese regulators shot a warning that virtual currency can’t replace fiat currency and that Bitcoin was merely a speculative asset.
Bitcoin’s dark days range on, with the top cryptocurrency shedding 15 percent in the past 24 hours to trade at a three-month low. Bitcoin dropped from $45,632 to trade just below $39,000 for the first time in 14 weeks. This drop took place in just a few hours, showing just how volatile the crypto market can be. This drop now takes the weekly losses to about 32 percent.
Just a little over a month ago, Bitcoin was soaring, recording a new all-time high at $64,941. It has now crashed 38 percent from that high in a month, marking one of the quickest and largest crashes in its history. Even more worrying is that on-chain indicators show that Bitcoin’s current drop has as devastating an impact as the March 2020 crash did. Back then, Bitcoin crashed by more than 50 percent, marked by a day that has come to be known as Black Thursday.
In the past 24 hours, BTC traded at a high of $45,688 and a low of $38,717 as per our data. On some exchanges like Bitstamp, it went as far as $38,500. It has since gained slightly to trade at $40,290 at press time.
Is China to blame?
China’s influence on the crypto market can’t be overstated. The Asian country controls an overwhelming majority of Bitcoin’s hash rate. As a result, any policy changes in the country tend to have a great ripple effect globally.
The latest is a report by three industry associations in China criticizing BTC. They claimed that Bitcoin has no real support value and will never replace the Chinese yuan. Further, they stated that the price run in the past few months is just due to pure speculation. They also reminded financial institutions that the law prohibits them from processing crypto transactions.
China being anti-Bitcoin isn’t news anymore, experts claim. Adam Reynolds, the CEO of APAC at Saxo Markets told Bloomberg:
It’s no surprise to me, as Chinese capital controls can be challenged by cryptocurrency purchases in the country and transfers out of the country. So avoiding use of them in the country is essential to maintaining capital controls. The only tolerable digital currency to a government with strong capital controls is their own CBDC.
Paul Haswell, a partner at Pinsent Masons, a Hong Kong-based law firm agrees. He commented, “Part of it is they have their own digital renminbi, part is the lack of control in terms of cash outflows and part of it is trying to make sure people don’t get scammed.”
While some blame China, there are those who point to the recent bullish news, stating that we were due a retracement. Stephane Ouellette, the CEO at FRNT Financial pointed in particular to Tesla’s entrance into Bitcoin.
“TSLA’s entrance into the space saw some of the most aggressive BTC buying I’ve personally ever seen — and it has to unwind,” he claimed.
Stay calm and hodl
Despite the large drop, some crypto experts are calling for calm, stating that this is just another bump on the road. Vijay Ayyar, the head of business development at crypto exchange Luno, believes that a 40 percent retracement is normal in crypto.
“So this is very much expected after we topped out at 64K ($64,000),” he told CNBC. In January, the market recorded a 35 percent correction but still managed to rally to a new ATH, he stated. He believes we are close to bottoming out.
Mike Novogratz, a Wall Street veteran and the Galaxy Digital CEO, also believes this is just a natural market reaction. He expects BTC to consolidate in the $40,000-$50,000 range for some time before finally breaking out.
Then we’ll have another leg up. And I say that not just by guessing. We see institutions moving in, and it takes them a while.