Hello and welcome to this week's edition of Overbit Round Up, where there isn't much to discuss other than this latest crash.
The markets went absolutely bonkers when Bitcoin, the lead digital currency dropped to nearly $30,000, less than half its previous month's high, before eventually regaining control of the $39,500 mark (still higher than it had been at the start of the year).
Bitcoin recovered somewhat around the time of Musk's tweets with a diamond and hands emoji, which were interpreted to indicate that the company had not sold off its massive bitcoin assets, as the CEO seemed to say recently. At its daily low on Wednesday, the unit had lost nearly a third of its value since the beginning of the week and more than half its value since its peak set just a month ago on April 14, at $64,869.78.
To make matters worse, Chinese authorities said on Wednesday that cryptocurrencies would not be permitted in transactions and cautioned investors against risky trading in them, despite the fact that the country is responsible for the majority of the world's mining.
The price fluctuations "seriously violate people's asset safety and disrupt normal economic and financial order," said the statement posted to social media by the People's Bank of China.
The notice warned consumers against wild speculation, adding that the "losses caused by investment transactions are borne by the consumers themselves" since Chinese law offers no protection to them.
It reiterated that providing cryptocurrency services and crypto-based financial products to customers was illegal for Chinese financial institutions and payment providers.
"This is the latest chapter of China tightening the noose around crypto," said Antoni Trenchev, managing partner and co-founder of London-based crypto lender Nexo. "There will always be a way to circumvent regulations," he said. "The point of this order is to tell financial institutions to up their game to detect these crypto-related transactions."
To sum things up, Bitcoin experienced a roller-coaster day on Wednesday, falling from $45,600 to under $40,000, then climbing back before dropping to $30,017 and rising again.
These troubles did not start on Wednesday, though, as BTCUSD and the rest of the market had a rough few day beforehand. Many pointed to Musk and Tesla as a part of the reason, as the latter announced that it would no longer accept bitcoin as payment for its electric vehicles, citing environmental concerns regarding cryptocurrency mining.
Then, Musk appeared to suggest that Tesla was planning to sell its vast holdings before clarifying that the company had not sold any bitcoin. "Elon Musk started the ball rolling," Germany-based crypto analyst Timo Emden told AFP. "It will take some time for them to recover from this shock."
For any newcomers, Wednesday, 19 May must’ve been a shock for anyone. Nevertheless, words from market veterans are ones to heed at this time: "This has happened before, and it happens every year...," said trader and ex-tech industry worker Zeng Jiajun. "Crypto is here to stay."
As always, thanks for reading Overbit Round Up. Take care and safe trading until next time.