On a chaotic trading day, the Crypto market plummeted on Wednesday following news that the Chinese regulators are set to intensify their crackdown on financial operators using digital tokens. The plunge intensified Bitcoin’s losses, which started with Elon Musk’s comments on the leading digital currency last week. The Tesla CEO revealed that his company won’t accept bitcoin payments for their vehicles anymore, citing harsh environmental implications of the currency. However, Musk’s tweet confused many on whether Tesla was dumping their BTC holdings.
Today, Bitcoin’s price plunged by almost 30%, losing $12,000 in value to trade slightly above the $30,000 mark. Other digital currencies also experienced heavy selling, with Ethereum losing around 40% in value. Over $8 billion positions were liquidated in the last 24 hours, following the loss in value.
This sharp move comes after China’s financial institutions received a warning on accepting crypto payments or providing related products/ services. This marks the beginning of global authorities starting to closely monitor the burgeoning market that has remained lightly regulated across the world.
On Wednesday, the market conditions remained highly volatile throughout the day, with Bitcoin’s price swinging in wide ranges. Top crypto exchanges Coinbase and Binance experienced technical issues as their users strived to sell their holdings, with other currencies, including dogecoin falling sharply.
According to a joint statement issued by the People’s Bank of China on Tuesday, virtual currency isn’t regarded as a real currency and shouldn’t be used in the financial market. The statement referred to the recent rise in prices as speculation. The authority’s stance added to the bearish trend that took the market by storm amid regulatory concerns last month and the currency’s impact on the environment.
The warning came as a reflection of China’s intention to limit institutional activity in the crypto market as they prepare to launch their new digital currency. China started its pressure on crypto coins in 2017, closing the country’s bitcoin exchanges which previously led the global trading records. However, other markets like the US are still comparatively open to institutions working with digital currencies.
Musk’s Impact On Bitcoin
While Musk had previously announced that Tesla would allow their customers to buy their electric cars using bitcoin, the CEO took a U-turn last week and suspended trades using BTC. His concerns center on Bitcoin mining, as it’s an energy-intensive process that requires the use of high-powered computers. The process also depends on electric power generated using fossil fuel, particularly coal.
For anyone who has followed the crypto market over the last few months, it’s evident that Musk has a huge influence on the market. When the billionaire tweeted in favor of the currency, the market went up significantly, and vice-versa happened when he announced he’s leaving the bandwagon. As such, many bitcoin users are begging Elon to tweet something positive to his 55.2 million followers to avoid losing their life savings.
What’s Next for Bitcoin?
With the crypto market being notoriously volatile, it’s almost impossible to predict bitcoin’s long-term trends. The volatility makes the digital currency a risky investment for anyone looking to buy the dip, meaning you should be ready to lose at any moment. However, bitcoin has enjoyed a strong opening this year despite the recent market crash.