India

Crypto in Free Fall: Bitcoin plunges 30%, Ethereum tanks 40% in 24 hours

This meltdown in the crypto market has also led India's largest cryptocurrency exchange - WazirX's services to crash.

The Cryptocurrency market on Wednesday saw a massive fall in prices of popular cryptocurrencies including Bitcoin, Ethereum, BNB among others putting investors in a frenzy. Bitcoin crashed to $30,066, the lowest since late January, wiping out more than $500 billion in value from the coin’s peak market value. This marked its largest one-day loss since March 2020.

Ethereum fell to as low as $1,850, its weakest level since late January. BNB was down almost 31% at $353.12. Almost all other coins are red and dropping as well. As per CoinGecko, the value of more than 7,000 tokens has shrunk more than $600 billion in the past week to $1.9 trillion. This massive retreat in the crypto boom has come as a test of its durability but on the other hand, is not a surprise given its volatile nature.

Multiple factors are at play, ranging from criticism of the environmental impact of Bitcoin’s energy usage by onetime proponent Elon Musk to Chinese regulators announcing a crackdown on cryptocurrencies.

What is behind the Cryptocurrency Market Meltdown?

China has barred financial institutions and payment companies from providing any services related to cryptocurrency transactions. This means that banks and online payment channels must not offer clients any service involving cryptocurrencies, such as registration, trading, clearing, and settlement.

China had issued such a ban in 2017 as well, but compared with the previous ban, the new rules have expanded the scope of prohibited services, and surmise that “virtual currencies are not supported by any real value”. This announcement coupled with a warning to investors against speculative crypto trading, seems to have exacerbated the selling.

But while China’s announcement came as the last straw, the decline in values of the two most traded cryptocurrencies BTC and ETH came last week itself after Tesla CEO Elon Musk announced that the electric carmaker won’t be accepting Bitcoin as payment — a reversal of an earlier decision that had sent it soaring to its $64,870 peak.

The decision apparently came over environmental concerns on “rapidly increasing use of fossil fuels for Bitcoin mining and transactions.” This was also followed by other tweets that caused confusion over whether the carmaker had shed its holdings of the currency.

Crypto Exchanges Crash as Investors Scramble to Exit:

The meltdown in the market has left investors scrambling to exit which has also caused India’s largest Cryptocurrency exchange – WazirX’s services to crash. While users were able to sell and buy certain cryptocurrencies on WazirX’s mobile application, several features such as charts were unusable.

Apart from WazirX, other global exchanges such as Binance and Coinbase have reported similar technical troubles leaving investors fuming.

Meanwhile, those in the ecosystem have maintained that tweets cannot be the underlying cause and that such a fall was due to short-term traders taking profits, especially after such a long rally.

“A nearly 40% dip in the bitcoin price from its all-time high looks dramatic but is normal in many volatile markets, including crypto” Avinash Shekhar, Co-CEO of ZebPay said, adding that the falling prices might serve as a buying opportunity for long term investors.

Amisha Singh

Gurgaon | Chandigarh. Engineering Undergraduate, Panjab University.

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