The cryptocurrency has fallen roughly 8% over the past 24 hours, according to Coindesk, and was trading near $33,200 at 4:45 a.m. ET on Tuesday. Other digital currencies, including ethereum and dogecoin, also fell around 8% or more.
The value of bitcoin has tanked more than 40% over the last month during a torrent of bad news, including a move by one prominent former backer, Tesla (TSLA) CEO Elon Musk, to stop accepting the cryptocurrency as payment for cars. There’s also increasing government scrutiny on cryptos in China and elsewhere.
It’s not clear what is driving the most recent downturn, but there have been a handful of recent developments that may be making investors anxious. Musk tweeted a meme that appeared to lament the end of his relationship with the cryptocurrency, causing bitcoin’s value to sink on Friday.
And over the weekend, several social media accounts related to cryptocurrency were blocked in China — a notable move from a country that has in recent weeks widened its crypto crackdown by banning banks and payment companies from providing crypto-related services, and tightening regulations against crypto mining.
On Tuesday, the Securities Daily, a state-owned news organization, commended Beijing’s ongoing focus on crypto, writing in an editorial that China has entered an era of “strong supervision” over the industry that is needed to guard against financial security risks.
Even former US President Donald Trump has knocked bitcoin recently, telling Fox Business on Monday that the currency “seems like a scam” that “takes the edge off of the dollar.” The Biden administration has also zeroed in on the lack of regulation in the crypto market, having recently unveiled new plans to tax bitcoin more heavily. The Federal Reserve appears to be growing more serious about exploring a potential digital dollar.
Experts have pointed out that ransomware actors use cryptocurrency to launder their transactions, and US authorities have called the misuse of cryptocurrency in such situations a “massive enabler.” Such issues returned to the spotlight on Monday when the US Justice Department announced that authorities recovered $2.3 million in bitcoin paid to ransomware hackers who attacked the Colonial Pipeline last month.
The sell-off could worsen if bitcoin prices fall below $30,000, according to Jeffrey Halley, senior market analyst for Asia Pacific at Oanda.
Breaking below that barrier would “basically put every long position since January 1st in the red, which I believe, will trigger another capitulation trade,” he wrote in a Tuesday research note.