Bitcoin price crash: Why is BTC stock going down?
THE price of Bitcoin has taken a 10% hit today as the cryptocurrency continues to tumble in value.
Bitcoin reached an all-time high of $63,745 (£45,918) on April 14 but has essentially halved in value in just two months.
It's now sitting around the $32,342 (£23,313) mark today, according to Coinmarketcap.com.
It's fall comes as China continues its tough crackdown on mining and trading the cryptocurrency
The crash follows a year of highs, but Bitcoin is still worth significantly more than it was in March 2020 when it was valued below $5,000 (£3,601).
Even so, it's a stark reminder of the high risks that come with investing in cryptocurrency.
You should never invest unless you understand it and can afford to lose cash.
And the UK's financial watchdog has warned Brits that they should be prepared to "lose all their money" if they invest in coins.
China's crypto crackdown
Bitcoin's value has plunged following a series of bans and sanctions from the Chinese government as part of its war against crypto.
Mining coins is an extremely energy-intensive process, and it's caused a number of blackouts across the country, plunging whole regions into darkness.
To crack down on the disruption, authorities in the southwest province of Sichuan ordered crypto-mining projects to close last Friday.
They've completely banned Bitcoin mining in the key southwestern province.
5 risks of crypto investments
THE Financial Conduct Authority (FCA) has warned people about the risks of investing in cryptocurrencies.
- Consumer protection: Some investments advertising high returns based on cryptoassets may not be subject to regulation beyond anti-money laundering requirements.
- Price volatility: Significant price volatility in cryptoassets, combined with the inherent difficulties of valuing cryptoassets reliably, places consumers at a high risk of losses.
- Product complexity: The complexity of some products and services relating to cryptoassets can make it hard for consumers to understand the risks. There is no guarantee that cryptoassets can be converted back into cash. Converting a cryptoasset back to cash depends on demand and supply existing in the market.
- Charges and fees: Consumers should consider the impact of fees and charges on their investment which may be more than those for regulated investment products.
- Marketing materials: Firms may overstate the returns of products or understate the risks involved.
Chinese media reported that electricity supply to all crypto mines across the province was stopped at midnight Sunday.
This is on top of a major police operation in the country that saw more than 1,100 people arrested on suspicion of using crypto assets to launder profits from internet and telephone scams.
It's meant that the value of Bitcoin has dropped by over a fifth in the last six days.
Elon Musk's Bitcoin spat
China's crackdown is not the only reason why Bitcoin's value has taken a hit recently.
Last week, a spat between Elon Musk and cryptocurrency exchange platform Kraken's chief executive Jesse Powell caused the coin to slide in value.
While Powell argued Bitcoin is "greener" than what critics like Musk say they are, the Tesla founder hit back asking what data Powell was using to make that statement.
The Twitter fight caused Bitcoin's value to drop 4.2% as a result.
Other cryptocurrencies have also taken a hit over the past 24 hours.
Dogecoin is down by 11.8% today at $0.2287 (£0.16), while Ether has plummeted 12%, falling below $2,000 (£1,441) for the first time in almost a month.
Binance Coin has also dropped by 3.3%, while XRP has fallen by 4.12%.
As the value of coins can go up or down in the blink of an eye, experts have warned that it's almost impossible to make a call on whether the crypto market will bounce back in the long-term.
But DeVere Groupchief executive and founder Nigel Green previously told The Sun that Bitcoin will remain a volatile coin until the cryptocurrency market as a whole matures.
“This is because it is a young market based around new and evolving technologies,” he said.
Novice cryptocurrency investors should be wary and do thorough research before parting with their cash.
There have also been warnings around scams related to cryptocurrencies,
Bitcoin broke through the $20,000 price mark for the first time in December as interest in bitcoin becomes more mainstream.
But the price previously plummeted when the coronavirus crisis first hit, sinking to £3,300 last March.
DIY investors have been warned about cryptocurrencies and other high risk products – including scams.
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