Bitcoin falls 6% to $30,000 for the first time in more than a month, as the Delta variant of COVID-19 spreads, threatening to sweep away the rest of the crypto market. CNBC reports that $89 billion were wiped off the entire cryptocurrency market in one day.
Bitcoin Falls, Affecting Crypto Market
As fears over a sluggish recovery and the Delta variant grow, other cryptoassets also reported prominent falls. Ether, which is waging the cryptocurrency war with bitcoin, plunged about 7% to $1,750, while litecoin fell 11%, down 9.5%.
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The Dow Jones Industrial Average (INDU) dived by 2.1% or about 725 points. The S&P 500 (SPX) finished Monday with a 1.6% slip, while the Nasdaq (COMP) dipped by 1.1%.
Edward Moya, senior market analyst for the Americas at Oanda, wrote in a note: “Bitcoin is the ultimate risky asset right now and it could see intense selling pressure if Wall Street enters into panic selling mode.”
Investing in cryptocurrencies is based on trust and liquidity, and since there is a little less, the environment simply presents more challenges in the short term, said Keith Lerner, market strategist at Trust Advisory Services on Bloomberg.
Cryptocurrencies, Up Against It
Analysts see the $30,000 level as critical for bitcoin, especially when the price held in January amid the regulatory repression in China and the U.K. The loss of this benchmark could cause many investors to throw in the towel with bitcoin.
The next floor for bitcoin would be at $20,000, the point where the spectacular bull rally began, taking prices to the $65,000 mark. Still, the bitcoin plunge could drag along the entire crypto market, especially ether, which has also lost the $ 2,000 reference.
Strategist Vijay Ayyar asserts that bitcoin would need to form another bottom before resuming the uptrend. He predicts that the cryptocurrency will fluctuate in the wide range of $20,000-40,000 for the remainder of 2021.
With this outlook, bitcoin faces a giant challenge now that its main bullish narratives have been exhausted.
Regulatory crackdowns keep coming from all fronts, with China clamping on the industry and reducing crypto mining power by 75.65% between September 2019 and April 2021. The U.K. banned Chinese cryptocurrency platform Binance in June, one of the world’s largest in terms of volume.
In the U.S., the Secretary of the Treasury Janet Yellen pressured the country’s financial regulators to approve new control rules over what is known as “stablecoins” or digital currencies with a stable quotation.