Crypto Market Drops to $1.6T Amid a Brutal $800 Billion Wipeout

The cryptocurrency market has tumbled to $1.6 trillion after it grew exponentially to a staggering $2.4 trillion recently. The value of cryptocurrencies breached over $2 trillion the first time early in April, doubling in about two months on the optimism of institutional investors towards cryptocurrencies.

A Forgettable Week

Over 7,000 tokens tracked by CoinGecko have dropped more than $800 billion in value the past week.

Bitcoin tumbled below the $31,000 mark on Wednesday. The cryptocurrency has declined by almost 40% from a record high of $64,895 hit on April 14. It is also nearing its first monthly decline since November 2018. 

China imposing fresh curbs on transactions involving cryptocurrencies on Tuesday is one of the several factors at play. Selling was heightened by China’s announcement banning financial institutions and payment companies from providing services related to cryptocurrency transactions. It also cautioned investors against speculative crypto trading.

Factors affecting Crypto

Elon Musk seems to be on a one-person mission to dismantle Bitcoin. All drama began on January 29, 2021, when Bitcoin spiked from $32,000 to $38,000 after Elon Musk added the hashtag #Bitcoin to his Twitter bio.

He later described Bitcoin as a “good thing:” in a Clubhouse chat declaring his full support of bitcoin.”

In February, Tesla disclosed in an SEC filing that it had acquired $1.5 billion in Bitcoin. It also announced that it would begin accepting Bitcoin as a form of payment.

Cryptocurrency has significantly declined from last week after Musk reversed on Tesla accepting bitcoin as payment. His subsequent tweets caused further confusion over whether the world company had shed its holdings of the coin.

Bitcoin vs Gold

The ratio of bitcoin’s price relative to gold has crashed to the low levels since the beginning of February. The plummet comes amid greater caution about speculative assets and the post-pandemic economic recovery. Bitcoin’s proponents argue it’s the current store of value, a claim belied by the token’s volatility.

In mid-April high, an ongoing rally in ether, the second-largest cryptocurrency, drew attention after a pullback by the dominant Crypto. But that has also stalled. On Monday, Chris Weston, head of research at Pepperstone Group in Melbourne, said that he was closing a short bitcoin/long ether trade as the “dust needs to settle.”