After seeing exponential growth of $2.4 trillion in value thanks to growing optimism from institutional investors, the cryptocurrency market has now tumbled down to $1.6 trillion amid a brutal wipeout now being experienced by the crypto sphere.
A staggering drop of more than $800 billion plagued over 7,000 tokens that are being tracked by CoinGecko. On Wednesday, crypto leader bitcoin bled and fell down below $31K but has made a slight recovery, exchanging hands at over $38.1K at press time but is still down by 23.2% for the past week.
Ethereum also fell hard after breaching the $4,200 mark this month. At the time of writing, it is trading at almost $2,480 and has been down 36.7% for the past seven days.
The China Effect
On Tuesday, China imposed new regulatory measures involving cryptocurrencies and after announcing the banning of financial institutions and payment companies from providing crypto-related services and transactions, there was heightened selling of bitcoin, becoming one of the factors for the decline in the price of the digital currency.
China’s caution to investors against speculative crypto trading also sent shockwaves to the crypto market, with its effects now evidently showing up.
The Elon Musk Show
Elon Musk is now considered as a one-man wrecking crew for bitcoin and other cryptocurrencies as his actions have contributed both to the rise and demise of the top crypto asset, oftentimes affecting the market in its entirety.
On January 29, 2021, Musk added #Bitcoin on his Twitter bio, helping it to spike from $32K to $38K. Since then, Musk has been sprinkling love bits for digital currency.
But his announcement of Tesla halting acceptance of bitcoin as payment, citing negative environmental impacts of its mining process as the main reason, immediately sent bitcoin prices crashing and leading to such a huge loss for the crypto market.
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