GUANGZHOU, China – Bitcoin and other digital coins fell on Friday, dropping the value of the cryptocurrency market by more than $ 260 billion.
According to data from CoinDesk, Bitcoin fell nearly 10% to $ 49,281.40 in the last 24 hours around 2:06 p.m. Beijing time. Ethereum fell to $ 2,202.05, a drop of more than 11%. According to price tracking site CoinMarketCap, XRP, the fifth largest cryptocurrency, fell over 22%.
This wiped out the entire cryptocurrency market valued at around $ 260 billion.
It was unclear what triggered the sell-off, despite the fact that cryptocurrencies are known for their wildly volatile prices.
“The market has grown quite a lot overall and will likely cool off before the next leg,” Vijay Ayyar, head of business development at Cryptocurrency Exchange Luno, told CNBC via email.
US stock indices fell on Thursday after reports that President Joe Biden was considering a capital gains tax hike.
“There was also a broader decline in equity markets that could impact any risky asset,” added Ayyar.
In this year alone, Bitcoin is up 71% and Ethereum is up 200%.
Part of that support was due to increased purchases of Bitcoin by institutional investors. And companies like Tesla and Square have also bought billions of dollars worth of Bitcoin.
Banks are also trying to enable their customers to get involved in the Bitcoin market. In March, Morgan Stanley announced it would give access to three funds that allow Bitcoin ownership, CNBC reported.
However, concerns about government action against Bitcoin continue to cloud the market. Jesse Powell, CEO of a large cryptocurrency exchange called Kraken, warned governments against restricting the use of Bitcoin and other cryptocurrencies.
India is planning to introduce a law banning the trading or even ownership of cryptocurrencies, Reuters reported last month. In February, US Treasury Secretary Janet Yellen labeled Bitcoin a “highly speculative asset” and said she was concerned about potential losses to investors.
Authorities around the world are examining how Bitcoin can be regulated. The Deputy Governor of the People’s Bank of China last week called Bitcoin an “investment alternative” that marked a more progressive tone in cryptocurrencies after violent crackdown by the country’s regulators against the industry in 2017 and 2018.