A selloff in Bitcoin accelerated Tuesday, pushing it below $30,000 for the first time in about a month.
The biggest digital coin lost as much as 4.1%, and was trading at around $29,700 as I write this in London at 7:01 a.m. Ether, second in the virtual currency rankings, also fell. The Bloomberg Galaxy Crypto Index was down about 4%.
Some traders viewed $30,000 to be a crucial support that could open the door for more losses should it be breached. This could cause further declines in the cryptocurrency market, and possibly even increase risk-averse behavior such as stock trading. Fears of slower economic growth and the spread of Covid-19’s delta variant are driving global equities down.
Vijay Ayyar is the head of Asia Pacific at Luno, a cryptocurrency exchange based in Singapore. “We will be trading between $20,000 to $40,000 during the remainder of the year.”
Now, the questioning of narratives that propelled Bitcoin to a record high of nearly $65,000 in mid-April are underway. Due to its limited supply, some had suggested that the digital asset could be used as an inflation hedge. However, Bitcoin’s 2% increase this year is less than the S&P 500’s 13%.
In an interview with Bloomberg TV, Michael Sonnenshein, Grayscale Investments CEO, stated that crypto investors know volatility will be part of their allocations.
Bitcoin has suffered many setbacks in recent times, including China’s regulatory crackdown (partially over concerns about high energy use) and the progress of central bank digital currency projects that could squeeze private currencies.
Dogecoin, the creator of the meme-token crypto, recently called crypto a sham and said that speculation is in retreat.
Officials around the world are also intensifying scrutiny of cryptocurrencies. Janet Yellen, Treasury Secretary, urged top U.S. financial regulators Monday to speed up their review of new rules to regulate so-called stablecoins.