The cryptocurrency market has dropped enormously, with the result the capitalization for the industry recording losses close to one trillion USD from the highs of April. News coming from Tesla and China have affected the cryptocurrency market in a substantial way.
We recap what happened for the previous week.
The sharp dip follows China's ban on financial institutions and payment corporations from offering cryptocurrency-related services and additionally warned investors to avoid speculative cryptocurrency trading. Traders in China accounted for a massive share of the bitcoin market, however, their effect has diminished significantly.
https://mp.weixin.qq.com/s/Zpl0MWesUp2E8R23fNJf_g
Correctly understand the essential attributes of virtual currency and related business activities
Virtual currency is a specific virtual commodity that is not issued by the monetary authority, has no monetary properties such as legal compensation and compulsion, is not a real currency, and should not and cannot be used as currency in the market.
Carrying out legal currency and virtual currency exchange and exchange business between virtual currency, buying and selling virtual currency as a central counterparty, providing information intermediary and pricing services for virtual currency transactions, token issuance financing, and virtual currency derivative transactions and other related transaction activities, Violation of relevant laws and regulations, and suspected of illegal fund-raising, illegal issuance of securities, illegal sale of tokens and coupons and other criminal activities.
The government report follows with more details on why cryptocurrencies are considered illegal inside China.
In this context, the biggest and most general cryptocurrency, bitcoin, recorded a 30% dip in the last 24 hours and reached $30,000 at the lowest levels recording the largest day-by-day losses since March 2020. However, it then decreased its losses and is shifting around $40,000, down now by 15%.
Apart from the decision of the Chinese authorities, however, closing week's poor reports have also affected funding for bitcoin.
On May 12, Tesla CEO, Elon Musk announced that Tesla is suspending care purchases with the use of Bitcoin, due to environmental concerns about the mining process (POW). In the wake of this announcement, more than $ 300 billion had been erased from the cryptocurrency market that day.
The announcement of the suspension of Bitcoin payments was made just three months after Tesla unveiled a $ 1.5 billion Bitcoin purchase and that the corporation would start accepting the Bitcoin cryptocurrency in exchange for its products.
It is additionally stated by Musk that the company has not sold any bitcoin, in order to calm the market.
However, Bitcoin continues to currently trade more than 40% higher since the beginning of the year and profits are 300% in the past 12 months.
It is noted, however, that Bitcoin has dipped about 40% from the all time high price of $65,000 which turned out in mid April. It is additionally directing for its first monthly red candle (drop) since November 2018.
The rest of cryptocurrencies also reported tremendous losses. Ethereum has fallen by 40% in the last 24 hours and was trading at $ 2,000. Dogecoin, the cryptocurrency that started as a joke, and obtained support from Elon Musk in early 2021 had also fallen by 50% in the past 24 hours.
Bitcoin Cash is now trading at $770 and was sold at prices lower than $600 during the price collapse. Bitcoin Cash is currently down by 60% since the recent yearly high ($ 1,600).
Top Crypto Exchanges reported outrages and were not accessible for hours during the dip. Binance, Coinbase, Kraken and more exchanges were down for hours as selling was intensifying.
China is creating its own digital currency and may find cryptocurrency competition compelling for its more than a billion population. It wants control of finance and will not allow a cryptocurrency to become widespread used inside its borders.
It also wants to expand regionally and globally with the new Silk Road initiative, a plan that will bring China in the leading place of world economies. Cryptocurrencies as a trillion dollar industry pose a threat to the Chinese governments ambitions. The crypto industry though is still at infancy level and will recover from any organized attempt to undermine their importance.
My portfolio suffers significantly and China is to blame. It was expected because this is a usual approach by Chinese officials and the CBDC it tries to create is considered too important.