Bitcoin decreased by 30% to near $30,000 on June 22. This trend continued a significant sell-off in the cryptocurrency markets that started last week.
The digital currency hit as low as $30,001.51 as the selling intensified before paring the losses. The cryptocurrency has not recorded those levels since January.
Bitcoin Plunges 30%
As the day went on, Bitcoin slowly increased and recorded that it was down 12%, about $38,205.49, shortly after 3:00 p.m. Eastern Standard Time. In the past week, the cryptocurrency's loss was more than 40%.
The sharp and sudden drop means that bitcoin had temporarily erased all of its gains following Tesla's announcement that it would purchase $1.5 billion worth of cryptocurrency. It was also down more than 50% in mid-April after it hit a record high of $64,829.
Bitcoin is not the only cryptocurrency that took a dive. Ether, the digital currency that powers the Ethereum blockchain, was also down by 22% at $2,620.97, according to The Independent.
According to Coin Metrics, Dogecoin, a cryptocurrency promoted by Tesla CEO Elon Musk, was down 25% to less than 36 cents. Both cryptocurrencies had larger losses earlier in the session.
On June 21, cryptocurrency exchange Coinbase was temporarily down for some users as the coins plunged, according to Forbes.
Elon Musk and the Chinese's Take on Bitcoin
On May 21, Tesla CEO Elon Musk said that the company had suspended car purchases using bitcoin due to environmental concerns over the computational mining process. This is where high-powered computers are used to solve mathematical puzzles to enable transactions using bitcoin.
Musk's comments cause more than $300 billion to be removed from the whole cryptocurrency market that day.
Musk also suggested that Tesla was not selling its existing bitcoin, posting his sentiments on Twitter and adding that Tesla has "diamond hands." The tweet was sent out after bitcoin recorded its lows for the day.
Right after Musk's announcement, three Chinese banking and payment industry bodies released a statement warning financial institutions not to conduct any virtual currency-related business, and that includes trading or exchanging fiat currency for cryptocurrency.
China has always been vocal about being against digital currencies. However, in 2017, Chinese authorities shut down local cryptocurrency exchanges and even banned initial coin offerings, which is a way for companies in the space to raise money through issuing digital tokens. This had a major contribution to the bitcoin price plunge.
The traders in China accounted for a massive share of the bitcoin market, but their influence was reduced after the shutdown. As a result, Chinese cryptocurrency operations have moved abroad.
Ulrik Lykke, the executive director at crypto hedge fund ARK36, said that the Chinese takedown and Elon Musk's announcements had a huge impact on the crypto market.
In May, more than $250 billion evaporated from the bitcoin market alone. Lykke added that things may be looking grim right now, but they consider this another hurdle for Bitcoin to overcome and a small one compared to what it had gone through in the past. In the last 12 months, Bitcoin is still up over 300%, and its year-to-date records 30%.
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Written by Sophie Webster