Bitcoin, the biggest and most traded cryptocurrency tumbled below the $40,000 mark on Wednesday, representing its lowest selling price in a 3-1/2 month low as China’s ban of financial and payment institutions from providing cryptocurrency services’ implementation intensified.
Reuters noted that although bitcoin had been under pressure from a series of tweets from Tesla boss, Elon Musk, but the news from China sent it as low as $36,250, a 15% drop in the trading session.
Bitcoin has suffered 40% depreciation in value from a record high of $64,895 recorded on April 14 and the cryptocurrency seems to be heading for its first monthly decline since November 2018.
As expected, Bitcoin decline whacked other crypto assets, with Ether , the coin linked to the ethereum blockchain network, shedding as much as 28% on Wednesday to $2,426, thus bringing its losses in the week since it hit a record high on May 12 to 40%.
According to market tracker Coingecko, Meme-based dogecoin also tumbled, losing nearly 30% at one point, while shares in the crypto exchange Coinbase dropped 5% in pre-market trading, resulting in its share price depreciation to nearly half from the peak hit on the day of its direct listing in April.
Cryptocurrency price declines last week were sparked by Musk Elon’s reversal on Tesla accepting bitcoin as payment and the auto industrialist’s subsequent tweets further accentuated the confusion over whether the carmaker had shed its holdings of the coin.
China had yesterday announced banning financial institutions and payment companies from providing services related to cryptocurrency transactions exacerbated selling, warning investors against speculative crypto trading.
Commenting on the current cryptocurrency market development, Executive Director at crypto hedge fund ARK36, Ulrik Lykke, said: “The crypto markets are currently processing a cascade of news that fuel the bear case for price development.
“News like this can get a lot of traction and easily stir market sentiment but they often prove of little significance in the long term,” he added.
Some cryptocurrency trading watchers have predicted more losses in the weeks ahead, pointing out that Bitcoin fall below $40,000 represents a breach of a key technical barrier that could trigger more selling.
Analysts at JP Morgan predicted that investors may also be dumping bitcoin for gold, citing positioning data compiled on basis of open interest in CME bitcoin futures contracts.
They told clients that the current tumbling of bitcoin shows “the steepest and more sustained liquidation” in bitcoin futures since last October, adding that it pointed to “continued retrenchment by institutional investors”.