Cryptocurrency Market Loses More Than $800 Billion After Bitcoin Crash
The market valuation for cryptocurrency lost more than $800 billion after Bitcoin plunged by nearly 30% this week.
Things soon took a turn, however, and the loss of value in Bitcoin accounted for almost half of the fall suffered by the world’s cryptocurrencies in the past week, following a historic peak as the market value reached $2.4 trillion earlier this month.
More than 7,000 tokens tracked by CoinGecko, per CoinMarketCap, have dropped more than $800 billion in value, with Bitcoin falling below $31,000 on Wednesday, May 19. The loss marks a decline of almost 40% from its record high of $64,895, which it reached on April 14 after jumping more than 450% in just six months.
While the drop would no doubt have been alarming to investors, some cryptocurrencies were met with a moment of respite today, May 20, when Bitcoin recovered by almost 5% to reach $40,245.47. Meanwhile, the beloved cryptocurrency Dogecoin rose by more than 12% following a crash of 27% on Wednesday, and Ethereum, aka ether, regained 7% after falling by 26%.
Bitcoin’s decline began earlier this month, when Musk suspended plans to let Tesla customers pay in Bitcoin. A bigger crash, however, came after Chinese regulators announced on Wednesday that banks and payment firms would be banned from using cryptocurrency services, including trading.
The regulations do not prevent investors from holding Bitcoin or other cryptocurrencies individually, but the National Internet Finance Association of China, the China Banking Association, and the Payment and Clearing Association of China claimed that cryptocurrencies are ‘not supported by real value’, The Independent reports, and therefore result in market volatility.
In a statement on the matter, the regulators said:
Recently, cryptocurrency prices have skyrocketed and plummeted, and speculative trading of cryptocurrency has rebounded, seriously infringing on the safety of people’s property and disrupting the normal economic and financial order.
While some believe the worst is yet to come for the cryptocurrency market, some experts cited by Forbes believe this kind of volatility is normal, and is in fact to be expected from such a speculative asset class.
Luke Lloyd, investment strategist at Strategic Wealth Partners, explained that investors often ‘take profits and cash out to go somewhere else’ when there is the potential for large gains for a certain cryptocurrency, explaining: ‘That’s what we are seeing with many cryptocurrencies right now that have had huge gains.’
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