- GOING DOWN
Why is the cryptocurrency market down today?
- Bitcoin and other major cryptocurrencies are down in valueCredit: AFP
- 11:11,
- Updated: 11:12,
CRYPTOCURRENCY markets remain volatile after crashing last week following months of major gains.
The price of Bitcoin and other digital coins plummeted after China announced a crackdown on cryptocurrencies.
The digital currency fell to its lowest level since January after Beijing said it will block crypto exchanges and initial coin offerings.
The price of bitcoin plunged below $33,000 last week after reaching a record high of $64,000 in April.
Bitcoin has regained some ground and is currently trading at $36,548 at the time of writing on Monday morning, up 3.05% in 24 hours but down around 20% since last week.
Other popular cryptocurrencies including Ethereum, Binance Coin, Cardano, Dogecoin and XRP have plummeted in price compared to last week.
5 Risk Of Crypto Investments
THE Financial Conduct Authority (FCA) has warned people about the risks of investing in cryptocurrencies.
- Consumer protection : Some investments advertising high returns based on cryptoassets may not be subject to regulation beyond anti-money laundering requirements.
- Price volatility : Significant price volatility in cryptoassets, combined with the inherent difficulties of valuing cryptoassets reliably, places consumers at a high risk of losses.
- Product complexity : The complexity of some products and services relating to
- Charges and fees : Consumers should consider the impact of fees and charges on their investment which may be more than those for regulated investment products.
- Marketing materials : Firms may overstate the returns of products or understate the risks involved.
The value of cryptocurrency markets as a whole has plummeted by $1trillion in just two weeks.
The crypto crash left investors unable to trade after exchanges experienced outages, including Binance and Coinbase.
Investors could not buy currency while prices were low, or sell existing stock to prevent losses as prices plummeted further.
Cryptocurrency prices also took a hit last week after Elon Musk's shock announcement that Tesla would no longer accept Bitcoin.
It shaved billions in value from Bitcoin, and sent the crypto market into a downward spiral.
This extreme volatility and the accompanying sudden market falls are just one of the reasons that investing in cryptocurrency is a very risky business.
You can be left with less money than you put in, and the markets can shift in the blink of an eye.
You might not be able to access your investment if platforms go down and you could be left unable to convert crypto into cash.
There have also been warnings around scams related to cryptocurrencies, with people losing vast sums of money.
You should never invest in something you don’t understand and you should never put in money that you can't afford to lose entirely.
Which cryptocurrency prices are down?
Bitcoin, the most popular cryptocurrency, has seen a small recovery since it plummeted on Wednesday.
The price at the time of writing is hovering around the $36,000 mark.
Other cryptocurrencies, such as Ethereum and Dogecoin, also crashed after China announced the ban and warned investors against speculative crypto trading.
Ethereum, the second-largest cryptocurrency, reached a record high of $4,121 on May 10, but has dropped in value since.
The price is up 6.96% up in the last 24 hours, after falling 14% yesterday, but is down more than 38% over the past week and is currently trading at $2,252 at the time of writing.
Dogecoin, a cryptocurrency that initially started as a joke, reached a record high of $0.71 on May 8.
The coin is currently trading at $0.327 at the time of writing.
Analysts have warned that the Dogecoin "bubble has to burst".
What Is Bitcoin?
- Bitcoin is a virtual currency
- It's traded between people without the help of a bank
- Every transaction is recorded in a public ledger, or "blockchain"
- Bitcoin is created by mining
- Mining involves solving difficult maths problems using computer processors
- Bitcoin can be traded anonymously, which can make it a popular way of funding illegal activities
- The value of Bitcoin fluctuates wildly
- Bitcoin is one of many different cryptocurrencies, but by far the most popular
Why are crypto markets down?
Crypto markets surged over the past year as interest increased among individual investors and well-known companies in the financial world.
Well-known mainstream companies such as PayPal, Mastercard and Facebook have backed cryptocurrencies.
Surges also came off the back of Coinbase going public in the US - it is the first cryptocurrency exchange to list its shares on a stock exchange.
It was seen as a major milestone and another sign of cryptocurrency becoming mainstream but its shares are now trading below the initial debut price.
The first signs of trouble came last week, when Elon Musk released a statement saying Tesla would no longer be accepting Bitcoin for purchasing vehicles.
The Tesla CEO has previously caused currencies to spike in value by mentioning them on Twitter or in press statements.
Posting to his personal Twitter account, he wrote: "We are concerned about rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel."
Within minutes Bitcoin started plummeting. Other cryptocurrencies quickly followed, with several of the mainstream coins seeing a huge drop in value.
The market drops highlight how volatile cryptocurrencies are.
Coins took another big blow in April when Turkey's central bank banned the use of cryptocurrencies for purchases.
Investors have also been warned to avoid new cryptocurrencies PooCoin and SafeMoon or risk losing their money.
Both of the coins are new and launched on March 8 - but little is known about them and whether they are legitimate.
The latest bizarre launch, PooCoin, has a logo shaped like the poo emoticon, which may be a joke.
SafeMoon technically isn't a cryptocurrency but a decentralised finance (DeFi) token, according to its website.
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, told The Sun: "The latest coins to be dropped into the crypto wild west slot machine may appear to be a joke, but could be no laughing matter for traders who dabble in products they don’t fully understand with money they can’t afford to lose."
Other coins which have surged in popularity recently include Dogecoin's rival Shiba Inu, Bonfire, and Cardano.
But warnings have been issued by experts, stating new coins are barely regulated and their valuation has no "reliable basis".
Plus, the recent crypto market price plummet sparked by Musk's announcement and China's ban has reportedly raised doubts among finance companies about whether these currencies can really make it mainstream.
https://www.thesun.co.uk/money/14704689/why-is-the-crypto-market-down/
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