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- Large sell-off seen in the crypto world as Bitcoin breached $30k for the first time since a February low
- A total of $600 billion have been wiped off in the last week itself as the Elon effect played a pivotal role along with Chinese regulators
- It was not severe as ‘Black Thursday’ where the Bitcoin price fell more than 40% in a single day
The Chinese whisper game initiated by Elon Musk hasn’t played well against the crypto investors. Liquidations crossed the 8,00,000 digit as retail investors booked profits at different levels in the last 24 hours. Musks’ Twitter escapades started the downfall of Bitcoins prices and as well as other altcoins in tandem.
Elon Musk’s Sunday musings and Chinese regulators’ ban on cryptocurrency trading has seen prices plummet to February lows. Musk retracted from his comments and has clearly stated that Tesla will not receive payments in any cryptocurrency or Bitcoin. Three regulatory bodies in China enforced a stricter rule that does not encourage people to trade in Bitcoin. However, it is still legal to hold cryptocurrency in the country.
‘Black Thursday’ yet to be repeated
March 12, 2020, is dubbed as the ‘Black Thursday’ when the price of Bitcoin fell more than 40%. Investors liquidated their holdings continuously as prices kept falling. As a result, average transaction volume declined rapidly, and high-quality data were studied post the crash to determine causation.
Fast track a year ahead, the fall is not that severe as the price of Bitcoin has started to hover around the $40k mark. Over $600bn has been wiped off from the crypto market in the last week itself. Experts believe that short-term traders have booked their profits and thus have exited from the market. Investors looking for value and a long-term perspective will stand to gain as the prices are currently cheap.
Regulations dampen the spirit, be it China or the USA
We are now aware that Chinese authorities are against speculative trading, but very few knew that the US government. It would come down harshly on the digital asset side. The US President, Joe Biden, was to impose a high tax rate on the wealthiest by 43.5% while adding another surtax. The long-term capital gains tax led to a wide sell-off that wiped out the $200 billion value of the entire cryptocurrency world.
The US wants to stop illicit trading or activities that indirectly lead to the funding of terrorist outfits. According to US law, identity checks are carried out if transactions breach the $3000 mark. Regulations are needed to keep illicit activities in check that accounted for 0.34% of the total crypto transactions last year.
Steve Anderson is an Australian crypto enthusiast. He is a specialist in management and trading for over 5 years. Steve has worked as a crypto trader, he loves learning about decentralisation, understanding the true potential of the blockchain.
