Bitcoin has dropped below $30,000 for the first time in weeks as the cryptocurrency falters in the face of economic and regulatory concerns.
As of Tuesday, the digital asset was valued at about $29,500 per coin, a 3.3% downward shift in the past 24 hours. Ethereum hovered at about $1,745, Ripple plunged 5.5% to $0.52, and Cardano fell more than 7% to land at $1.04.
The losses add to Bitcoin’s recent fall from grace, which began after its mid-April peak of more than $63,000. Ethereum topped out at more than $4,100 in early May before beginning its descent. Much of those losses are tied to regulatory concerns out of China, where a lot of the world’s Bitcoin and other cryptocurrencies are mined.
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The United States has been eyeing increased regulation in the cryptocurrency realm, with Treasury Secretary Janet Yellen meeting with top regulators, including Federal Reserve Chairman Jerome Powell, to discuss a plan to regulate so-called stablecoins. The stock market had its worst day in months on Monday, driving anxiety among investors looking to buy into high-risk assets.
The same day, Yellen met with the President’s Working Group on Financial Markets, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation. She said at the meeting that the country needs to “act quickly” to implement a regulatory framework for stablecoins, according to the Treasury Department.
Stablecoins are cryptocurrency that have their value tied to another asset class, such as gold or fiat currency, and don’t fluctuate up and down as wildly in value compared to digital assets like Bitcoin. Powell also recently discussed stablecoin regulation during testimony before Congress.
David Sacco, practitioner in residence at the University of New Haven’s finance department, told the Washington Examiner that this week’s latest plunge cannot be directly attributed to one cause but rather to concerns about Chinese regulation, discussions of U.S. oversight, and the jittery markets, among other factors.
Sacco said investors are eyeing the landscape and realizing there are quite a few different cryptocurrencies to invest in and positive news (such as El Salvador adopting Bitcoin) but are pairing with the fact that there is a lot of uncertainty related to the regulatory environment.
“Cryptos now have become just another high-risk financial asset class and respond to the same things that the rest of the markets do,” he said. “There’s never any one thing that drives these market moves.”
To mine for Bitcoin, high-powered computers are used to create rigs that verify virtual coin transactions. Many of those rigs are located in China. Prices plummeted in May after Chinese Vice Premier Liu He called for the “crackdown on bitcoin mining and trading behavior and resolutely prevent the transmission of individual risks to the social field.” China’s central bank also said it asked banks and payment institutions to crack down harder on trading of the digital assets.
China isn’t alone in its crypto crackdown. In Malaysia, authorities recently confiscated more than 1,000 Bitcoin mining rigs and ceremoniously destroyed them with a steamroller after police accused the miners of stealing electricity. The rigs alone were valued at some $1.26 million.
Monday’s sub-$30,000 dip comes after the Dow Jones Industrial Average fell about 725 points and shed more than 2% of its value the same day.
Sacco pointed out that Bitcoin is a risky asset class, like speculative stocks and commodities, adding that anytime there is a bad day in the market, people want to invest in more secure assets, which is generally bad for risk assets.
“I’m sure some of that is related to just the market taking a bath and what that means for risk assets in general. Because when that happens, people move out of risk assets into low-risk assets, things like treasuries,” he said, emphasizing that he avoids subscribing blame for one-day moves in any market to a single news item because there are so many factors at play.
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The last time that Bitcoin fell this low, on June 22, it caused the cryptocurrency to enter what investors refer to as a “death cross,” which occurs when a security’s short-term moving average falls below its long-term moving average.
