- May 25, 2021
- Posted by: Trading
- Category: News
Bitcoin has lost 5.86% against the US dollar so far this week, closing yesterday’s session at the 34,730.3 level after falling 7.60%.
It seems that the crypto bear market has already started, though considering how volatility affects this market, it’s not clear how long this could last or whether Bitcoin will end up coming back to this year’s highs.
“The asset class continues to be highly volatile, with the potential of significant price movements resulting from a single tweet or public comment,” commented an analyst at CIBC.
What seems clear is that this is somewhat linked to Elon Musk’s recent comments about the cryptocurrency, as well as the fact that China is now attempting to restrict Bitcoin mining and trading.
Some cryptocurrency miners have already halted their operations in China, including HashCow and BTC.TOP. The decision came after the Financial Stability Development Committee of the State Council in China announced that it is planning to crack down on both Bitcoin trading and mining.
China is not the only government that has expressed intention to further regulate the use, distribution and production of cryptocurrencies. The Indian government is also considering regulating digital currencies in order to curb illegal activities, which is something that the US Treasury Department is reportedly willing to do as well.
Added to this is Elon Musk’s recent announcement that Tesla, his most important company, won’t continue receiving payments in Bitcoin. The announcement was catastrophic for the market, especially since many considered that Tesla’s embrace of the cryptocurrency would push other traditional market actors to adopt it.
Musk claimed that his company is not willing to receive payments in Bitcoin anymore because of the environmental impact of Bitcoin mining. Mining requires high quantities of energy, and since miners often don’t use renewable energy sources, there are concerns that Bitcoin production could affect the environment negatively.
Despite the negative comments about Bitcoin, Musk insisted that he supports cryptocurrencies over fiat money, though he has compared Bitcoin to fiat currencies in the past.
In any case, not everyone in the markets is negative regarding Bitcoin. The cryptocurrency apparently also got support from Goldman Sachs, though they recently have expressed concern about how cryptocurrencies are used in illicit activities. They also highlighted that the company has taken some time to offer cryptocurrencies to its clients because the regulatory landscape remains uncertain.
By 9:45 GMT, Bitcoin rose by 6.33% against the US dollar to the 36,442.0 level.