By Natalie DeCoste
The historic rise of popular cryptocurrency Bitcoin has hit a snag as investors’ concerns over the currency have grown.
As of May 18, Bitcoin’s price fell 30%, dropping to as low as $30,201.96. This is the weakest the cryptocurrency has been since January of 2021. Prices did rebound, currently sitting at roughly $38,000.
The volatility in the market was not reserved for Bitcoin alone, as Ethereum and Dogecoin also took hits. Dogecoin declined 21% to about 38 cents, while Ether fell 22% to $2,694.77, after dipping 40% earlier.
“Many people have been tempted to invest purely because it has gone up in value and they have a fear of missing out. Bitcoin is a volatile asset, and as we have seen so often in financial markets, boom is almost always followed by bust,” said Rick Eling, investment director at wealth management firm Quilter.
Several negative forces facilitated the drops, including Tesla CEO Elon Musk’s announcement last week that Tesla would no longer accept bitcoin as payment, citing environmental concerns.
Other factors include China ramping up regulations on the currency as it is developing its own government-run cryptocurrency. The development of a state-backed digital currency led the country to reassert its rules banning financial companies from offering services for crypto trading.
Meanwhile, newly appointed Securities and Exchange Commission Chair Gary Gensler said earlier in May that he thought regulators should be technology-neutral on cryptos but that more consumer protection is needed in the markets.
“We believe government crackdown on cryptocurrencies can trigger another ‘crypto winter’ and reduced trading activity. Harsher crackdown on crypto is possible in many developing countries which may view crypto as a threat to their fiat currencies and monetary system,” Bernstein’s Harshita Rawat said in a note Tuesday.
Tuesday’s selloff has erased nearly $500 billion from the total value of all cryptocurrencies, according to CoinMarketCap.
As a result, cryptocurrency exchange platforms, including Binance and Coinbase, experienced outages.
Binance announced temporary halts on Ethereum and ERC-20 withdrawals due to network congestion on May 19. In a separate statement, the company added that it had temporarily suspended trading for all Binance Leveraged Tokens, with some exceptions, including BTCUP, BTCDOWN, and ETHUP.
Meanwhile, Coinbase announced that it is looking into delays in ETH and ERC-20 withdrawals due to network congestion.
“We’re seeing some issues on Coinbase and Coinbase Pro and some features may not be functioning completely normal. We’re currently investigating these issues and will provide updates as soon as possible,” a Coinbase spokesperson said in an email to Yahoo Finance.
The outage lasted about an hour and a half but now appears to be resolved.
