Bitcoin(BTC) wiped all its gains for the year as it dropped below the $30,000 support level amid concerns over the broader crackdown on crypto trading and mining in China. The currency crashed below its May price bottom and shed as much as 12%, failing to recapture its last week’s high of $40,000.
Bitcoin Drops Below Support Level Amid Increased Market Volatility Due to Heavy Crackdown in China
The primary cryptocurrency had briefly overcome instability and surpassed $40,000, leading investors to believe the worst might be over. However, after reaching $41,000, BTC experienced several back-to-back losses, culminating in the breach of $30,000 support.
Analysts believe that Bitcoin might have a hard time finding a new support level in the $20,000 range. The currency has erased more than 50 percent of its gains since mid-April when it was changing hands at nearly $65K.
At the time of writing, BTC had suffered a 12% knockback to US$28,824, before it recouped at $29,600 on Bitstamp.
Sean Rooney, head of research at Valkyrie Investments suggests the decline signals “that Bitcoin traders could find themselves in choppy waters for weeks to come”.
The Mining Purge Left BTC Nursing Heavy Losses
The latest drop in BTC is a remarkable comedown for the digital asset, which just a few days ago was buoyed by Wall Street and retail investors following its adoption as legal tender by El Salvador. But the primary currency has been walking the tightrope of volatility since Tesla CEO Elon Musk brought up its energy use and China began its clampdown on crypto trading and mining.
On Monday, China escalated its attacks on cryptocurrencies, when the country’s central bank reported that it had summoned officials from prominent lending services as well as AliPay to reinforce the limitations on crypto services. Chinese authorities are also moving ahead with prohibitions on mining operations, forcing crypto miners to migrate to the US.
According to Eric Diton, president and managing director of The Wealth Alliance, the crypto market is heavily reliant on acceptance, and “when you have a country like China come out against Bitcoin, that really hurts its global acceptance and that’s why you’re seeing the value deteriorate as much as it has.”
Meanwhile, Bitcoin’s tanking reverberated in the trades of other cryptocurrencies. For instance, Ether plummeted to $1,500, a level that it should maintain to avoid further selloffs. Meme currency Dogecoin also fell by 8.5%.