As China imposed tighter regulations on cryptocurrencies, the market suffered four-month lows in value on May 19. However the very next day, Bitcoin recovered slightly, still, the investors are concerned about it.
On Wednesday, Bitcoin, the most popular cryptocurrency around the world, tumble 14 percent in the market, this was the lowest drop since January. A day later, the digital asset managed to recover slightly and reached $38,072.
However, it was not the same situation with Ether. The token did plunge down along with Bitcoin on May 19 but did not recover. Instead, its value decline 3 percent more on May 20, to $2368. Till today, Ether experienced a drop of 28 percent in the market.
Before this recent fall, the crypto market welcomed a huge number of investors but soon after the value came down, the same investors rushed to exit trades.
The latest drop in the value of Bitcoin and other cryptocurrencies was stimulated by a statement, where the Chinese authorities ban the financial and payment institutions in the country from providing crypto-related services. However, Bitcoin was tumbling since, Elon Musk, the CEO of Tesla, denied accepting Bitcoin payment for the electric cars.
Notably, it was not the first time, China banned crypto-related services. A few years ago, the country banned the local cryptocurrency exchanges but Wednesday’s decision is considered to be a broader step.
Now, the country has banned the usage of cryptocurrency in payment and settlement. China also restricted certain institutions from providing products or services related to cryptocurrency.
Chris Weston, the head of research at brokerage Pepperstone in Melbourne, has recently pointed out that in just 24 hours the cryptocurrency worth $9.13 billion was liquidated and on the other hand, $532 billion in volume were transacted.
“It’s too early to say if the rebound we’ve seen off the lows in crypto has legs, but as we roll into Asian trade, I question if we will get a chance to catch our breath or is there more volatility in store?” he said.
Due to this market breakdown, some investors, who leveraged position in cryptocurrency derivatives, were forced to suppress, which resulted in a further drop in the price.
Justin d’Anethan, the head of exchanges sales at Diginex, has further predicted a drop in the value of Bitcoin. But he also claimed that the digital asset will stabilize around $30,000.
This year has been a wild ride for cryptocurrency. The digital asset market suddenly surged up and suddenly came down, the market kept on fluctuating. Amid this situation, some investors predicted its mainstream acceptance.
Till today, the market of Bitcoin is up 27 percent. Also, for this week, its intra-day volatility spike around 300 percent.
People might feel that they have suffered a huge loss after this drop, but this could be considered as an opportunity to buy more cryptocurrencies at the cheapest value.
Michael Oliveri, an independent New York-based equity trader who formerly was a partner at New York Securities said, “Bitcoin broke down technically. It was an easy short setup actually. I’m annoyed I didn’t short it. I wouldn’t chase it now.”
On the other hand, an independent London-based trader, Milko Markov, has said that people who have been investing in cryptocurrency for quite a long time know two cardinal rules of it, i.e., don’t leverage and dollar cost average.