Bitcoin ends week in volatile flow with Chinese bulls
Bitcoin was whipped ahead of the weekend after another warning from Chinese authorities regarding the crackdown on cryptocurrencies.
The largest digital currency fell 10% at the end of Friday, to as low as $ 33,550 before rebounding to $ 38,133. The coin nearly hit $ 30,000 earlier in the week, having ended May 14 at $ 49,100.
The final blow came when the Chinese State Council reiterated its call to reduce Bitcoin mining and trading. The crypto market was already rocked earlier in the week by the forced sale and possible U.S. tax consequences.
“You should always act with caution with China – never get too bullish or bearish,” said David Tawil, president of ProChain Capital. “We’ll have to see what the regulations bring. It’s one thing to say, it’s another to do.
Friday’s previous sale hit still-furious Bitcoin believers after former promoter Elon Musk flip-flopped and criticized the token for its power consumption. Bitcoin has fallen about 24% since last Friday, although it has gone from a Wednesday plunge to $ 30,000. Other coins have fallen as well – Ether has fallen by about 38% in the past seven sessions.
Besides China, experts say cryptocurrency has become an asset that investors hold for the longer term. Former US Treasury Secretary Lawrence H. Summers compared crypto to gold as a safe haven asset.
“Crypto is here to stay, and probably here to stay as some kind of digital gold,” Summers said in an interview with David Westin on “Bloomberg Wall Street Week”. “There’s a good chance cryptography will be part of the system for some time to come.”
Still, he doesn’t expect consumers to turn to Bitcoin for most of their payments, even though it could become an important part of e-commerce.
The sour stretch with Bitcoin began with Musk suspending acceptance of Bitcoin payments at Tesla Inc. and trading barbs with cryptocurrency boosters on Twitter. China’s central bank on Tuesday added to the downward pressure with a statement warning against the use of virtual currencies. On Thursday, it emerged that the United States may require crypto transactions of $ 10,000 or more to be reported to tax authorities.
China has long expressed its displeasure with the anonymity provided by Bitcoin and other crypto tokens, and earlier warned that financial institutions were not allowed to accept it for payment. The country is home to a large concentration of crypto miners around the world, who require huge amounts of energy and therefore run counter to the country’s efforts to reduce greenhouse gas emissions.
“The new guidelines issued by regulatory agencies – they take it more seriously, they want more enforcement,” said Bobby Lee, founder and CEO of crypto storage provider Ballet, in an interview Friday. “We are talking about attacking minors. The question is: can they catch all minors? “
Actions taken by China this week highlight the country’s continued willingness to seek control over the notoriously volatile asset class. This is something China would rather see regulated by the People’s Bank of China, market watchers say.
“It’s not really the mining problem that’s the problem,” said Matt Maley, chief market strategist for Miller Tabak + Co. “They say they’re doing this as part of an effort to control the taking risk in their markets, but it’s really a signal that China won’t be a big market for cryptos unless it’s controlled by the PBOC. ”
Until then, Bitcoin’s volatility will likely remain high. The sale on Friday pushed Bitcoin again below its average price over the past 200 days, which for some chartists and technical analysts suggests that it could drop further to around $ 30,000, where it has found more support. early this week.
This week’s fluctuations have led to huge sell-offs by leveraged investors and damaged the narrative that cryptocurrencies will become more stable as the industry matures. Musk’s actions showed just how a few tweets can still rock the entire market. But even more, the last few days have renewed the regulatory threat in the crypto market.
“Investors are underestimating the regulatory risk of crypto as governments defend their lucrative currency monopolies,” said Jay Hatfield, managing director of Infrastructure Capital Advisors in New York. In the United States, the possible imposition of transaction reporting requirements could be the “tip of the iceberg” of potential Treasury rules on virtual currencies, he said.
(Add Summers’ comments to the seventh paragraph.)
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