Bitcoin Sell-Off Causes the Crypto to Plummet Below $30,000

Bitcoin Sell-Off Causes the Crypto to Plummet Below $30,000

PlusMarkets AnalysisJuly 20, 2021

The latest Bitcoin sell-off accelerated today, causing the crypto to plummet below $30,000. By 7:00 am in London, the largest cryptocurrency had fallen as much as 4% and was trading at around $29,700 per coin. 

Bitcoin’s decline impacted the rest of the cryptocurrency space, too. According to reports, Ether dropped by over 6%, while XRP plummeted close to 9%

Bitcoin’s Downfall 

The plunge in the crypto’s value coincided with a big sell-off in global stock markets. Yesterday (July 19th), the Dow Jones Industrial Average experienced its worst day since October 2020. 

“There’s been a broad sell-off in global markets, risk assets are down across the board,” Amber Group’s Annabelle Huang pointed out. As concerns regarding global economic recovery heightened, broader risk assets weakened, including high yields. “Coupled with recent BTC (bitcoin) weakness, this just sent crypto market down further,” Huang concluded

Some traders had initially viewed $30,000 as a key support that, if breached, might cause further losses. If the crypto space continues to experience losses, it could potentially accelerate a larger departure from risk assets like stocks. Concerns around slowing economic growth and the spread of the COVID-19 Delta variant are causing global equities to fall, too. 

“We’re going to need to form another base first before resuming another bull trend,” said Vijay Ayyar, the cryptocurrency exchange Luno’s Head of Asia Pacific. 

Mid-April High 

In mid-April, Bitcoin hit a record high of almost $65,000. Now, the narratives that propelled the cryptocurrency to its all-time high are being questioned. At the time, many argued that the digital token could act as a hedge against inflation because it is in limited supply. However, the digital currency has only advanced 2% this year, which lags far behind the S&P 500’s 13% advance. 

“Investors who are allocating to crypto know that volatility is going to be part of it,” said Michael Sonnenshein, Grayscale Investments’ CEO. Sonnenshein addressed the fact that those who invest in digital currencies should be aware of just how much their value fluctuates. 

Crypto Crackdown 

Cryptocurrencies have encountered a number of hurdles lately. The crypto crackdown in China has been ongoing since May, when the nation banned financial institutions and payment companies from providing crypto-related services. The following month, multiple arrests took place involving people suspected of using digital currencies in nefarious ways.  

China’s regulators followed this by increasing the pressure on banks and payment businesses to stop providing crypto services. Prior to the crackdown, 65% of Bitcoin mining occurred in China. This number has fallen significantly. 

Authorities in the UK have contributed to Bitcoin’s decline after they banned the world’s largest cryptocurrency exchange, Binance. Regulators in Canada, Japan, and Thailand have issued warnings against Binance, too. 

What’s Next? 

Cryptocurrencies, by their very nature, are incredibly volatile. However, this drastic drop is reinforcing a negative outlook among analysts. 

“I am expecting a strong dip towards $22K,” said Crypto Finance AG’s Patrick Heusser. 

Senior market analyst at Oanda, Edward Moya’s thoughts were in line with those of Heusser’s. Moya noted that if “the stock market sell-off intensifies, bitcoin and Ethereum will easily extend their declines.” 

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