Bitcoin and cryptocurrencies have been sent into a tailspin during the last few days as a fresh China cryptocurrency crackdown sparks fear among traders.
The bitcoin price has managed to hold over the closely-watched $30,000 per bitcoin level, falling to lows of $31,160 on the Luxembourg-based Bitstamp exchange before clawing back some ground. The bitcoin price is now around 50% off its all-time high of almost $65,000 set in April.
Meanwhile, other smaller cryptocurrencies that have outperformed the bitcoin price in recent months, have collapsed—with the likes of meme-based dogecoin, ethereum rivals polkadot and solana, Ripple’s XRP, and buzzy token safemoon—still in freefall.
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Dogecoin, the crypto pet project of Tesla billionaire Elon Musk, has dropped almost 40% in the last week and is down some 72% from a peak reached ahead of Musk’s much-hyped appearance on comedy sketch show Saturday Night Live in May.
The dogecoin price has lost 20% in the last 24 hours, compared to a 1% bitcoin price fall. Meanwhile, safemoon, a new cryptocurrency that’s been called a Ponzi scheme even by some of its own investors, is down 11% over the last 24-hour period and 30% down from its all-time high, set last month.
Elsewhere, ethereum rivals polkadot and solana and Ripple’s XRP payment token have all continued their descent after racking up triple-digit percentage gains in recent months. The falls over the last 24 hours have wiped some $100 billion from the combined cryptocurrency market capitalization that’s now worth around $1.3 trillion—down from $2.5 trillion in May.
As the dust settles on the latest bitcoin and cryptocurrency price crash, those in the bitcoin industry are examining what led to the sell-off and where the market goes from here.
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“There are multiple reasons for [bitcoin’s] near-term weakness, including fresh strength in the U.S. dollar because of hawkish Federal Reserve, China accelerating ban on crypto-mining firms and blocking banking services for crypto firms, and a lack of institutional interest in crypto,” Pankaj Balani, the chief executive of the Singapore-based bitcoin exchange Delta, said in emailed comments.
“Having said that, we believe that there is not much downside for bitcoin in the short-term as we trade near the bottom end of the $30,000-$42,000 range. In the short-term the macro environment does not look weak with broader markets continuing to rally and U.S. tech stocks posting all-time weekly highs. We expect bitcoin to bounce from here and challenge the $40,000 mark again in the coming weeks. $30,000 is the key level for traders to watch—a conclusive breakdown below $30,000 might be coupled with heavy selling activity in bitcoin and the entire crypto market.”