Bitcoin (BTC) was once again quoted below US$ 30,000 this Tuesday morning (20), dragging the valuation of all other digital currencies down. In less than 24 hours, about $89 billion was “wiped” from the cryptocurrency market, according to data from CoinMarketCap.
The movement of digital currencies follows a global trend. Fears about a new variant of the coronavirus have caused investors to withdraw their funds from stock exchanges around the world. On Monday (19), the Dow Jones Index registered its worst day since October last year.
Restrictions on cryptocurrencies
China’s government has cracked down on cryptocurrency trading and mining. The Chinese forced the closure of mining operations in their main regions due to the intensive use of electricity.
Since 2017, trading in cryptocurrencies has been banned in the Asian giant, which forced the market to move abroad. Now, regulators are looking to increase trade oversight. China’s central bank has constantly reminded finance and fintech companies about banning services related to the encryption market.
Other countries are also putting restrictions on the crypto market, such as Malaysia, which has put a steamroller on more than 1,000 mining machines. Binance, the world’s largest digital currency exchange, also suffered from restrictions in the UK. In addition, authorities in Japan, Canada and Thailand have issued a warning about the broker.
What will happen to Bitcoin?
Bitcoin came to be seen as a buffer against traditional market risks and used to appreciate in the uncertainties of the global economy. In April 2021, digital currency reached a new record, being quoted at $65,000.
Now, concerns about the strength of the economic recovery after the pandemic have combined with Bitcoin’s recent weakness and destabilized the cryptocurrency market. While some people are leaving the industry, this can also be an opportunity to enter the market — it all depends on the level of risk the investor is willing to take.
According to Vijay Ayyar, head of business development at the Luno cryptocurrency exchange, Bitcoin could reach the level of $22,000 to $24,000, but should recover in the future. “I would see Bitcoin between 20-40K ($20,000 to $40,000) for a while, before the optimism returned,” said Ayyar.