Bitcoin (BTC) is going through its worst moment in 2021. On Tuesday (22), the price of the main digital asset in the market fell to below US$ 30,000 for the first time since the beginning of January, practically canceling out everything. the appreciation accumulated by the cryptocurrency this year.
According to the index CoinDesk, the digital currency was traded for a minimum value of US$ 28,800 this morning. As a comparison, its record price in 2021 is $64.8 thousand, recorded in mid-April. Thus, the latest fall of bitcoin practically canceled all its accumulated appreciation since the first day of the year, when it operated at the level of US$ 29 thousand.
The cryptocurrency rose about 400% throughout 2020 and took the news around the world in 2021, drawing the attention of big companies like Tesla and MicroStrategy, which became the main institutional investors in the asset by buying billions of dollars in BTC.
Fear of investors encourages sales
With major companies legitimizing bitcoin investment and with cryptocurrency prices skyrocketing in the first four months of the year, retail investors also saw an opportunity to profit in the short term. Driven by market euphoria, demand for digital assets rose sharply in the first quarter.
However, the opposite version of this effect is happening now. Ordinary investors panic as prices plummet and their money depreciate, leading to a growing spree of cryptocurrency sales.
“Any significant drop below $30,000 will cause many players who entered the market on impulse to give up,” Matt Maley, chief strategist at investment manager Miller Tabak, told Bloomberg. “So even though bitcoin can change the world in the long run, that doesn’t mean it can’t go down in the short run.”
Other cryptocurrencies also fell
As it crashed, bitcoin also took with it most of the major cryptocurrencies on the market. The ether (ETH), native to the Ethereum blockchain and the second largest capitalization digital currency, reached a minimum price of US$ 1,710, according to the index CoinDesk. This is its lowest value since the end of March.
In addition, bitcoin further astonished the financial market by breaking the $30,000 line, which had long been seen as a limit to its devaluation. With more uncertainties surrounding its price and prospects for the short term, many people are abandoning the “alternative” investment option.
China is the biggest enemy of bitcoin and cryptocurrencies
Bitcoin’s steady high season has begun to be shaken by Chinese regulators, who have tightened restrictions and bans on the supply and use of cryptocurrencies in the country. In mid-March, China’s central bank announced new prohibitionist measures on digital currency services and transactions in the country, news that was received like a bombshell by investors and caused a loss of $750 billion in the market value of one’s cryptoactives. day to day.
This past Monday (21st), Chinese authorities reinforced their decision in a statement sent to the country’s main financial institutions. In the document, the People’s Bank of China (PBOC) advises that all accounts linked to cryptocurrency exchanges and exchanges must be suspended. The government also reaffirmed that banks are prohibited from trading, clearing and liquidating these assets.
“The most speculative part of the financial market is cryptocurrencies,” said Eric Diton, president and managing director of investment consultancy Wealth Alliance, to Bloomberg. “Ultimately, what determines the value of bitcoin is its acceptance and supply and demand. When you have a country like China opposing the asset, it really hurts its global acceptance and that’s why we’re seeing the value deteriorate as much as it does now,” he concluded.
With information: Bloomberg