Mercurial Bitcoin comes back from below US $ 30,000 but future remains uncertain
Cryptocurrency investors could breathe again Tuesday after Bitcoin first fell below US $ 30,000 for the first time in five months, but eventually managed to rebound up to over US $ 32,000.
Bitcoin, which was affected by Chinese measures to regulate its existence, rallied back to trade for US $ 32,674 (+ 0.17%), after falling to its lowest level since January (US $ 29,334). In 2021, it rose overall by more than 12%, but it is now way below figures registered in mid-April (US $ 64,870).
Analysts believe this mercurial behaviour can be due to concerns about the Chinese government’s adjustment measures coupled with fear regarding the overall acceptance of Bitcoin and other cryptocurrencies. The Chinese government is running a campaign to curb the Bitcoin mining industry, which is what that market calls the computers that make decentralized cryptocurrency work, approving transactions and creating new units.
According to former cryptocurrency producers, energy providers in China’s Sichuan province were ordered to stop supplying electricity to those companies before Sunday.
Since the end of 2020, Bitcoin has been drawing interest from more and more investors, such as Wall Street banks and industrial groups such as vehicle manufacturer Tesla as well as individuals looking after their assets through the pandemic. Thus, the cryptocurrency market grew to almost US $ 2.5 trillion in mid-May but has started a downward path since then due to the measures of the Chinese government, international scepticism and other reasons.
Bitcoin also fell below US $ 30,000 Tuesday due to the announcement of the United States that it would push for its regulation. The cryptocurrency’s fall down to US $ 29,760 meant a 9% drop intraday and a 26% drop weekly.
On Sunday China banned banks and payment platform Alipay from trading cryptocurrency-related products, after shutting down almost all crypto-generating farms.
Last weekend, Bitcoin was around US $ 35,000, after failing to exceed US $ 40,000 the previous days despite the approval of its use in El Salvador as legal tender.
Cryptocurrency trading restrictions, bans, regulations and advances have been hitting Bitcoin since mid-April, when it hit its record high of $ 64,863.
Since then, the bans in China, the announcements of regulation in Europe and the United States, and even the decision of automaker Tesla to back down on accepting it as a means of payment, boiled up to the value of Bitcoin falling to less than half its worth just two months before.
Also adding to Bitcoin’s decline were reports since February this year from the University of Cambridge, in the United Kingdom, which account for the enormous energy consumption that the Bitcoin network represents. The Cambridge Bitcoin Electricity Consumption Index (CBECI) is an indicator that provides a real-time estimate of the total annual electricity use of the Bitcoin network and allows live comparisons with alternative uses of electricity, which has led many countries to reassess the commercial activity of cryptocurrencies as well as the mining to produce them.