After a brutal week for Bitcoin and other cryptocurrencies, the market appears to be settling down and stopping its free fall.
Last Friday, Bitcoin, the largest cryptocurrency by market cap, was flirting with $51,400 per coin, but it soon began slowly shedding value in the following days. By Tuesday night, it was below $43,000, and then the real slide began.
At its trough on Wednesday morning, Bitcoin had cratered by more than 20% of its price in just 24 hours and was trading below $35,000. The drop was the lowest that Bitcoin had experienced since the start of 2021 and generated waves in the investment world and on social media, on which several cryptocurrency-related topics were trending worldwide.
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Ethereum, the second-largest cryptocurrency, also shed more than a quarter of its value in just 24 hours. On Wednesday morning, it dropped to just $2,500 per share, down from recent peaks of $4,300. The “meme coin” Dogecoin, known for being promoted by billionaire businessman Elon Musk, sat at about 36 cents per share, down from more than 70-cent highs.
As of Friday morning, the coins had gained value and have somewhat stabilized from their midweek slumps but are still down from their record highs in the past few weeks. Bitcoin was trading at about $40,000 around press time, although volatility will remain high going into the weekend, according to CoinDesk.
And while many are in the red on Friday, other cryptocurrencies have settled down from their plunges and have increased in value from their Wednesday troughs.
This week’s across-the-board drop in prices began last week when Musk, who is also the founder of Tesla, announced that his company would stop accepting Bitcoin for car purchases. The sell-off continued when the People’s Bank of China issued a statement reiterating that digital tokens can’t be used as a form of payment, adding that they are not real currencies.
Soon after appearing to stabilize on Friday morning, another announcement from China caused prices to drop, although not by nearly as much as earlier this week. Chinese authorities said in a statement that increased regulation is needed to “crack down on Bitcoin mining and trading behavior, and resolutely prevent the transmission of individual risks to the social field.”
The announcement caused Bitcoin to drop to about $37,000 before settling and bouncing back up to about $38,000.
Despite this week’s losses, some top investors are saying that Bitcoin and other cryptocurrencies are here to stay. Carlyle Group co-founder and billionaire investor David Rubenstein said he has put money into companies that facilitate crypto trading, although not individual coins.
“It has its ups and downs, and yesterday was not a good day,” Rubenstein told CNBC after Wednesday’s rout. “But that’s true of anything that is relatively new, and I don’t think you’re going to see anything like crypto going away and disappearing. It’s here.”
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Treasury Secretary Janet Yellen, on the other hand, has blasted Bitcoin as “inefficient” and said she doesn’t think it will be “widely used as a transaction mechanism.”
