Bitcoin sinks to below $30,000 in latest sell-off, wiping $100bn from crypto market

World's biggest cryptocurrency loses 5.8 per cent of its value on Tuesday and is 53.4 per cent below its all-time high

FILE PHOTO: A representation of virtual currency Bitcoin is seen in front of a stock graph in this illustration taken January 8, 2021. REUTERS/Dado Ruvic/File Photo

Bitcoin has plunged below $30,000 for the first time since June, dragging other digital currencies down and wiping $100 billion from the crypto market, even as equity markets recover.

The world's largest cryptocurrency lost 5.8 per cent of its value, trading at $29,654.54 on the Luxembourg-based Bitstamp exchange at 1pm UAE time on Tuesday. The last time the digital currency fell below the $30,000 mark was on June 22.

Ether, the second-biggest cryptocurrency, traded 7.2 per cent lower at $1,793.93 and XRP fell 8.8 per cent to $0.52733.

"The digital asset has broken through its key support level of $30,000. It is critical that the digital coin regains ground above the $30,000 level, as a significant breach could result in a massive technical sell-off," Naeem Aslam, chief analyst at broker Avatrade, said.

"Having said that, crypto traders are well aware that the price action of cryptocurrencies is highly volatile, and the decline in prices should not come as a surprise given that similar price fluctuations have occurred in the past."

Bitcoin has more than trebled in price from $9,175 a year ago, but has more than halved since hitting an all-time high of $63,729.50 in mid-April. It is now only 2.3 per cent higher than it was at the beginning of this year.

Cryptocurrency afficionados argued during its recent run-up in prices that Bitcoin is being much more widely adopted by institutional investors, with the likes of Fidelity investing in the Grayscale Bitcoin Trust, which has more than $20bn of assets under management.

The latest Digital Asset Fund Flows report by digital asset investment manager CoinShares reported $2.9 million of net inflows into cryptocurrency funds last week, bringing the total so far this year to $5.7bn. About 73 per cent of this has been invested in Bitcoin.

However, cryptocurrency funds have witnessed outflows in seven of the past 10 weeks as investors become more nervous about the threat of regulation.

In China, authorities have closed down Bitcoin mining operations in Sichuan due to concerns about the amount of power it consumes and instructed banks not to provide cryptocurrency-related services such as clearing or trading. There have also been crackdowns on illegal miners in the UK and Malaysia.

In the US, Treasury Secretary Janet Yellen has urged financial regulators to "act quickly" to instigate new rules governing stablecoins, a type of cryptocurrency whose value is fixed to a national currency or commodity, but are considered a risk as they remain unsupervised.

Updated: September 21st 2021, 7:58 AM
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