April 21, 2021

Market Talk: Bitcoin’s Massive Sell-down

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What happened?

Bitcoin saw a massive sell-down over the weekend, plunging more than 12% – the biggest intraday drop since February 2021. While Bitcoin crawled back part of its losses, the cryptocurrency was still down more than 10% from its high of nearly US$65,000, at about US$57,000 as at time of writing. At one point, according to crypto-data website, coinmarketcap.com, Bitcoin and the global crypto market lost more than US$200 billion and US$350 billion in market cap respectively.

1 month market capitalization of Bitcoin (USD)

Source: Coinmarketcap

1 month market capitalization of global cryptocurrencies

Source: Coinmarketcap

Why did it happened?

The fall came on the back of news citing that the US treasury intends to investigate financial institutions conducting money laundering through digital assets. The crash was also attributed to a blackout at China’s Xinjiang which powers a huge number of Bitcoin miners, resulting in about half of the Bitcoin network to go offline in 48 hours according to Coinmarketcap.com.

As the frenzy in cryptocurrency rises, it has also unnerved some investors and authorities. According to a Bank of America survey, nearly 3 in 4 professional investors see bitcoin as a bubble, with fund managers rating bitcoin second on the list of being the most crowded trades. Turkey’s central bank had also ban cryptocurrency payments last week citing excessing volatility and a lack of regulation. This echoes similar concerns from other central governments including US Fed Chairperson Jerome Powell who has cautioned over Bitcoin investments, pointing out that it may not serve as an effective store of value as these so-called currencies are not “backed by anything”.

Nonetheless the global cryptocurrency market and bitcoin has continued to trend higher this year, with their market cap doubling year to date, as more investors pour into the market and companies starting to lend their support for the cryptocurrency market helping to bring it mainstream.

What do you think about the Cryptocurrency market now? Let us know in the comments section below!

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