Bitcoin prices fell dramatically for the second time in a month earlier this week (July 20) as Covid-19 fears engrossed markets around the world, exacerbating the impact of a global crypto crackdown.
Bitcoin struggled to return to its former soaring values of up to $64,000 in value, as it fell below the $30,000 threshold that investors and market analysts warned could open the door to new lows in the cryptocurrency‘s value.
Bitcoin fell by at least 5% in the previous 24 hours on Tuesday, following warnings that ongoing global shutdowns on cryptocurrency mining procedures and trading could continue to wreak havoc on the market.
Stock markets in the UK, Europe, and the United States all fell on Monday as the latest relaxation of coronavirus restrictions in England heightened economic concerns amid a raging ‘pingdemic’ and Prime Minister Boris Johnson’s self-isolation at Chequers.
Fears that Bitcoin is in a bear market have been allayed by the recent rally, which was boosted by The B Word earlier this week and the launch of a new pro-Bitcoin organisation indorsing institutional acceptance of the cryptocurrency.
Elon Musk, the Tesla CEO, appeared alongside Jack Dorsey, the founder of Twitter and Square, to discuss his own Bitcoin, Dogecoin, and Ethereum holdings, in addition to the main coin’s future scenarios for Tesla payments, which were suspended in May due to environmental concerns.
What is Bitcoin value today?
According to CoinDesk, Bitcoin‘s price was fluctuating around $32,622.04 or £23,711.49 at 7.30 a.m. on Friday July 23, having reached a new low for July of $29,368 just before 11 a.m. on Tuesday July 20.
Last month, on June 22, after hovering around the $30,000 mark, Bitcoin‘s value plummeted to a new recent low of $28,814.75 that afternoon.
The currency has since improved and coped to trend upwards once more, but its price has remained stuck in the low to mid $30,000 range.
The recent drop saw the stock’s highest value of $64,000 in May almost halved, with pundits warning in late June that a drop to under $30,000 could spark a wave of sell-offs and more people refusing to ‘hodl’ their positions.
Ethereum prices were also up today, with the coin typically moving in lockstep with Bitcoin, recovering from a nearly 6% price drop on Tuesday (July 20) to a much more positive $2,081.57 as of 7.30 a.m. Friday.
Ethereum, a widespread cryptocurrency related with the rising crypto trend of NFTs, has an all-time high of $4,382.73, which it reached during the cryptocurrency boom in May, but has struggled to regain since.
Dogecoin, a popular memecoin, had been showing dwindling values until recently, but after Musk praised the coin’s community and less serious status as an altcoin at the major Bitcoin conference on Wednesday July 21, it soared to over $0.20000.
As of 7.45 a.m. today, Dogecoin’s price is around $0.196059, or £0.142461, while Cardano’s price is around $1.20, XRP Ripple’s price is $0.601200, and Stellar’s price is $0.269238.
What caused the decline in cryptocurrency prices?
The recent drops have coincided with a growing crackdown on cryptocurrencies in China, with authorities in the southwest province of Sichuan ordering the closure of Bitcoin mining operations last month.
As part of a series of financial risk-control measures, China’s State Council recently pledged to crack down on mining and trading.
While data on mining use to be scarce, according to data from the University of Cambridge, Bitcoin production in China accounted for about 65 percent of global construction last year.
Its second-largest producer is Sichuan.
“(The) crackdown on Chinese miners could mean they’re offloading coin into a thin market, dragging us down,” said Ben Sebley of London-based crypto firm BCB Group.
China’s central bank has summoned a number of banks and payment institutions, urging them to tighten their regulations on cryptocurrency trading.
Independently, China’s third-majorinvestor by assets, Agricultural Bank of China (AgBank), said it was following the People’s Bank of China’s supervision and would arrange due attentiveness on clients to eradicateunlawfultransactions and crypto mining.
The late-June cryptocurrency crash caused a similar fluctuation in the price and availability of Graphic Processing Units (GPUs), with reports of dumping of these critical mechanisms for mining rigs in China at the time of the crackdown sending prices skyrocketing around the world.
Following the announcement, countries such as South Korea pledged to combat the rise in cryptocurrency-based money laundering, while the Metropolitan Police announced that it had successfully interrupted a large-scale cryptocurrency money-laundering related operation in the United Kingdom.
As a result of the global crackdown on crypto, cryptocurrency exchange platforms like Binance have been feeling the heat around the world, as regulators and governments have begun to pay close attention to the operations of such platforms.
What is the difference between crypto mining and crypto trading?
Cryptocurrency mining is the process by which users are rewarded with Bitcoin or similar coins such as Ethereum or Dogecoin in exchange for solving computational puzzles that verify and validate ‘blocks’ of transactions.
These happen to be then added to a blockchain, which helps to increase its value by facilitating valid, clean, transactions, with miners remunerated with cryptocurrency for their efforts.
Due to the lack of banks and infrastructure to authenticate transactions and exchanges as a decentralised network and form of currency, mining is critical to the operation and value of any cryptocurrency.
As a result, government crackdowns on the activity, particularly in countries where there is a lot of mining, will result in a drop in the price and value of Bitcoin.