GUANGZHOU, China – Bitcoin and other digital currencies plummeted on Friday, wiping out over $ 260 billion from the value of the cryptocurrency market.
At around 2:06 pm Beijing time, bitcoin has dropped nearly 10% in the past 24 hours to $ 49,281.40, according to data from CoinDesk. Ethereum fell to $ 2,202.05, down more than 11%. XRP, the fifth largest cryptocurrency, has plummeted by more than 22%, according to price monitoring site CoinMarketCap.
This wiped out an estimated $ 260 billion worth of the entire cryptocurrency market.
It is unclear what triggered the sell-off, although cryptocurrencies are known for their wild price swings.
“The market has grown a bit overall and is probably cooling down before the next stop,” Vijay Ayyar, head of business development at cryptocurrency exchange Luno, told CNBC via email.
US stock indices fell on Thursday after President Joe Biden is considering a capital gains tax hike.
“There was also a broader decline in the stock market, which could affect all risk assets,” Ayyar added.
This year alone, bitcoin has risen by 71% and Ethereum has rallied by 200%.
Part of that support has been due to the increase in bitcoin purchases by institutional investors. And even companies like Tesla and Square have bought bitcoins worth billions of dollars.
Banks are also trying to allow their customers to get involved in the bitcoin market. In March, Morgan Stanley said it was launching access to three funds that allow bitcoin ownership, CNBC reported.
However, concerns over a bitcoin regulatory crackdown continue to cloud the market. Jesse Powell, CEO of a major cryptocurrency exchange called Kraken, warned that governments could crack down on the use of bitcoin and other cryptocurrencies.
India is planning to introduce legislation to ban trading or even ownership of cryptocurrencies, Reuters reported last month. In February, US Treasury Secretary Janet Yellen called bitcoin a “highly speculative asset” and said she was concerned about potential losses for investors.
Authorities around the world are looking into how to regulate bitcoin. The deputy governor of the People’s Bank of China last week called bitcoin an “investment alternative,” which set a more progressive tone on cryptocurrencies after a fierce crackdown by the country’s regulators in the sector in 2017 and 2018.