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Crypto in free fall: Bitcoin tanks 30% to $31,000, Ethereum loses 40%, Dogecoin down 45%

Crypto in free fall: Bitcoin tanks 30% to $31,000, Ethereum loses 40%, Dogecoin down 45%

The downfall came after Tesla turned a cold shoulder to Bitcoin; an announcement from People's Bank of China reiterating the ban on digital currencies exacerbated the worsening sentiment

Cryptocurrencies have landed in troubled waters. All popular digital currencies are witnessing steep drops with key technical levels in red.

Bitcoin, the most popular crytpocurrency in the world lost 30 per cent to $31,000, as its most popular proponent, Tesla CEO Elon Musk, backtracked. The rout wiped $500 billion from Bitcoin's peak market value. The coin is now down more than 50 per cent from its record level of almost $65,000 posted in April. It has lost all the momentum it gained after Tesla announced in February its investment in the digital coin and agreed to accept payments for its cars and services in Bitcoin. As of now, while the EV maker has retained its Bitcoin holdings, it has stopped accepting Bitcoin payments, citing extensive use of fossil fuels in mining the currency.

As Bitcoin's fortunes turned for the worse, other cryptocurrencies did not fare well either. Ethereum, the second-largest cryptocurrency in the world, is down 40 per cent, whereas Dogecoin, the meme crypto popularised by Musk, lost 45 per cent.

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The downfall came after Tesla turned a cold shoulder to Bitcoin. Musk's tweets last week announcing Tesla's apprehensions towards the currency were followed by the selloff. His earlier tweets on Bitcoin have been moving prices for the cryptocurrency for the past few months. Musk's latest Twitter communications also sparked rumours that Tesla may offload all of its Bitcoin holdings. However, he later put all speculations to rest stating that the company hadn't sold any of its holdings.

An announcement from People's Bank of China on Tuesday reiterating that digital currencies cannot be used for payments exacerbated the worsening sentiment. In its latest attempt to clamp down on what was a burgeoning digital trading market, China has prohibited financial institutions and payment companies from providing services related to cryptocurrency transactions and warned investors against speculative crypto trading.

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Under the ban, such institutions, including banks and online payment channels, must not offer clients any service involving cryptocurrency, such as registration, trading, clearing, and settlement, the three industry bodies - the National Internet Finance Association of China, the China Banking Association and the Payment and Clearing Association of China -  said in a joint statement on Tuesday, Reuters reported.

Analysts observed that the several key technical indicators were flashing red. Ipek Ozkardeskaya, senior analyst at Swissquote in Gland, Switzerland told Bloomberg that the next important support level stands close to $37,000, then at the $30,000 mark. She further added that a pullback to these levels, and even below, was pobable, even in the short run.

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The bad spell for cryptocurrencies took its toll on the associated stocks too. Coinbase Global Inc share fell 5.2 per cent in the US premarket trading, whereas Marathon Digital Holdings slipped 12 per cent.