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Bitcoin falls sharply as major sell-off continues

written by Bella Palmer
bitcoin

Other cryptocurrencies also plunged, with ether dropping nearly 16% at $2,960.29 and Dogecoin declining 16% at $0.4189

Bitcoin fell sharply on Tuesday, continuing a major sell-off that began a week ago. The digital currency dropped more than 13% to hit an intraday low of $38,585.86, according to CoinDesk data. It was the lowest level since Feb. 9, the last time it fell below $40,000.

Later, bitcoin was trading above $40,000 again, but still down by nearly 12%.

Negative news over the past week has dampened sentiment for bitcoin.

On May 12, Tesla CEO Elon Musk said the electric carmaker had suspended vehicle purchases using bitcoin, citing environmental concerns over the computational mining process. This is where high-powered computers are used to solve complex mathematical puzzles to enable transactions using bitcoin.

Musk’s comments caused over $300 billion to be wiped off the entire cryptocurrency market that day.

The announcement to suspend bitcoin payment came just three months after Tesla revealed that it bought $1.5 billion worth of bitcoin, and would start accepting bitcoin in exchange for its products.

Early this week, the Tesla CEO suggested the company may have sold its bitcoin holdings but later clarified that it has not sold any Bitcoin.

Then on Tuesday, three Chinese banking and payment industry bodies issued a statement warning financial institutions not to conduct virtual currency related business, including trading or exchanging fiat currency for cryptocurrency.

China’s hard line on digital currencies is not new. In 2017, authorities shut down local cryptocurrency exchanges and banned so-called initial coin offerings (ICOs), a way for companies in the space to raise money through issuing new digital tokens.

Bitcoin is still up 40% year-to-date and more than 300% in the last 12 months.

Other cryptocurrencies also plunged. Ether, the digital currency that powers the Ethereum blockchain, dropped nearly 16% at $2,960.29. Dogecoin declined 16% to $0.4189.

Around $270 billion had been wiped off the entire value of the cryptocurrency market in 24 hours.

Bitcoin is off by nearly 38% from its all-time high of $64,829.14 which was hit in mid-April.

Vijay Ayyar, head of business development at cryptocurrency exchange Luno, said that a 30% to 40% pullback is normal during bitcoin bull markets. So this is very much expected after we topped out at 64K, he said.

Ayyar pointed to a roughly 35% correction in January as well as similar declines during the huge run-up in bitcoin’s price in 2017.

We are definitely close to a bottom around $38,000 to $40,000, he said.

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