The price of Bitcoin BTC/USD lost 20% Wednesday morning, bringing its seven-day losing tally to around 36%. The weakness extended beyond Bitcoin as many high-profiled cryptocurrency names were also down sharply.
Statement warning from China sends BTC lower
Bitcoin was trending lower over the past few days, in part due to Tesla Inc (NASDAQ: TSLA) CEO Elon Musk confirmed on Twitter his company is suspending Bitcoin transactions. While the CEO later clarified this is not the case, investors continued to focus on his public comments regarding the sustainability of Bitcoin mining and transactions.
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Adding to the negative news cycle, Chinese officials issued on Tuesday a new law that financial institutions and payment companies can no longer offer clients any service related to cryptocurrencies. The ban includes trading, clearing, and settlement. According to CNBC, multiple Chinese regulatory bodies said in a joint statement:
Recently, crypto currency prices have skyrocketed and plummeted, and speculative trading of cryptocurrency has rebounded, seriously infringing on the safety of people’s property and disrupting the normal economic and financial order.
By Wednesday morning, Bitcoin traded as low as $30,201.96 in reaction to the developments out of China.
Other cryptocurrencies sharply in the red
Many investors have been sitting on the sidelines and waiting to buy cryptocurrencies after a sharp pullback. Here is a summary of how several closely tracked cryptocurrencies were performing Wednesday morning:
Cryptocurrency selling spilling over to stocks
Several stocks with exposure to Bitcoin or other cryptocurrencies were also sharply in the red Wednesday morning. Investors looking to buy a cryptocurrency stock after a selloff may want to consider taking a look at these names:
- Riot Blockchain Inc (NASDAQ: RIOT): down 12% at $22.49.
- Marathon Digital Holdings Inc (NASDAQ: MARA): down 13% at $19.89.
- Coinbase Global Inc (NASDAQ: COIN): down 9.5% at $216.32.
- Tesla: down 4.8% at $549.80.
Should you buy the dip in cryptocurrencies now?
Galaxy Digital CEO Michael Novogratz said on CNBC’s “Squawk Box” that cryptocurrencies will recover — but investors shouldn’t expect a swift rebound. He said:
It’s going to take a while, the market is going to consolidate — it will find a bottom somewhere. I’m hoping it’s close to here.
The broader long-term story related to cryptocurrencies’ growth potential “hasn’t gone anywhere,” Novogratz said. The “crypto revolution” will continue, albeit after a setback that may have hurt some investors financially.