Bitcoin, after struggling over the last week in the face of regulatory pressure and environmental concerns, has crashed under $40,000 per bitcoin.
The bitcoin price, which started May at almost $60,000, has dropped under the closely-watched $40,000 level after it emerged China was redoubling its crackdown on bitcoin and cryptocurrencies.
Meanwhile, other major tokens ethereum, Binance’s BNB, cardano and the viral, meme-based dogecoin also crashed back—dragging the cryptocurrency market down by billions of dollars.
The bitcoin price is now down over 30% on this time last week when Tesla
The bitcoin and crypto sell-off was exacerbated this week by China instructing banks not to facilitate crypto transactions and warning investors to avoid speculative trading.
The price of the top five cryptocurrencies by value—ethereum, Binance’s BNB, cardano and dogecoin—are all down by double-digit percentages in the last 24 hours with around $700 billion now wiped from the cryptocurrency market over the last week.
“The crypto markets are currently processing a cascade of news that fuel the bear case for price development,” Ulrik Lykke, executive director at crypto hedge fund ARK36, said via email.
“When it comes to Elon Musk’s tweets or negative remarks from the People’s Bank Of China, it is important to distinguish their true impact from their perceived impact. Realistically, it is not the first time Elon Musk’s tweets have been erratic and, frankly, wrong; likewise, China has changed its stance on cryptocurrencies multiple times before. News like this can get a lot of traction and easily stir market sentiments but they often prove of little significance in the long term. The crypto markets are extremely emotionally driven and their participants are prone to overreacting to events they perceive as negative.”
Despite the sharp falls, many in the bitcoin and cryptocurrency community remain upbeat, arguing the latest sell-off is merely a “pull-back.”
“Bitcoin’s pattern over the last 10 years has been meteoric rises followed by pull-backs,” Joe DiPasquale, the chief executive of bitcoin and crypto hedge fund BitBull Capital, said via email.
“The trends has been higher highs and higher lows: one year ago today, bitcoin closed at $9,927 while it now sits at about $39,000. While it’s certainly fallen from its $63,000 high, that is still a 300% rise. The fall in price is a natural consolidation period that we see as necessary for the support lines to form for future appreciation. We remain bullish on bitcoin and confident that we will see bitcoin at $100,000 in the future.”