Cryptocurrencies See Dramatic Crash As Spooked Investors ‘Cut Their Losses’ And Bail
Cryptocurrencies have seen a sharp dip in value after investors seemingly cut their losses and sold up.
Due to the decentralised nature of cryptocurrencies, their value can change rapidly. Investors have seen the worth of their cryptocurrencies slide in the last week, and it has now seemingly caused a spiral for the likes of Dogecoin and Shibu Ina as people pull out their investments.
Naturally, there isn’t just one single reason for the declining value of cryptocurrencies, and on top of short-term investors withdrawing their currency, China may also be impacting the situation.
Huobi Mall, part of cryptocurrency exchange Huobi, announced on Monday that it was suspending crypto mining services in China. Equally, BTC.TOP, a crypto mining pool, paused its business in China, noting regulatory risks. HashCow also put a stop to its business in the country.
This move comes on the back of Chinese regulators toughening their stance on miners. On the back of this action, it is believed that some miners will have sold cryptocurrency to balance their books and avoid catching the eye of regulators.
James Quinn, managing partner at Q9 Capital, a Hong Kong-based cryptocurrency private wealth manager, told Reuters:
Many miners keep much of the bitcoin/ETH etc that they mine and don’t hedge it all into fiat right away.
If they are pulling up stakes or shutting down, they may need to reduce their balance sheets in the short term.
Kyle Rhoda, an analyst for IG Markets, noted why others may have sold their investments:
After a brief bounce off last week’s multi-month lows, some of the paper-handed types have seemingly sold-out,
Or (they) decided to pack it in and cut their losses, as Bitcoin’s momentum, and the speculative mania that drove it almost entirely disappears.
To combat dwindling interest, Elon Musk has attempted to drum up support as he tweeted, ‘The true battle is between fiat & crypto. On balance, I support the latter.’ Despite Musk’s backing, it now seems that many may have jumped ship when prices began to plummet. The value of Bitcoin is currently 45% below last month’s record peak of $64.895
This could be bad news for the business magnate, as his company Tesla recently invested $1.5 billion in bitcoin. However, the company chose to reverse the decision to accept the currency in exchange for its vehicles, and this now appears to be a wise move considering the falling price of Bitcoin.
Cryptocurrencies are incredibly volatile, and as a result some may bounce back to greater value quickly. However, the lack of ‘speculative mania’ and regulations in China may make it harder for currencies to leap in worth as they have done previously.
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