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Bitcoin drops back below $30,000

KEY POINTS

  • Bitcoin fell below $30,000 for the first time since Jun. 22 dragging other digital coins lower.
  • Even with the plunge bitcoin is up 2% for the year, according to CoinDesk data

Bitcoin is trading in the $29,000 range, about 3% lower on the day, according to Coin Metrics. Ether is down 1.25% and XRP fell 4%. Even with the plunge bitcoin is up 2.3% for the year, according to CoinDesk data. Ether and XRP are both up about 140% for the year.

The plunge came amid news that the New Jersey Attorney General issued a Cease and Desist Order against the New Jersey-based crypto services firm BlockFi, ordering it to stop offering interest-bearing accounts, according to Forbes and later confirmed on Twitter by the company CEO.

Regulatory scrutiny

A renewed crackdown in China on cryptocurrency trading and mining has weighed on the bitcoin price.

Major regions responsible for bitcoin mining in China have forced operations to shut down. Bitcoin mining is an energy-intensive process that facilitates bitcoin transactions and creates new coins.

China’s central bank has also spoken to finance and fintech companies reminding them not to offer crytpo-related services to customers.

China banned local cryptocurrency exchanges in 2017 forcing them to move offshore. That did not stop Chinese traders buying and selling digital coins. But the tough actions this year from Chinese regulators has looked to further tighten restrictions on trading and mining.

“All signals are red as BTC (bitcoin) continues to be weighed down by China’s ultimate crypto ban and worsening macro economic conditions from a surge in covid variants,” said Jehan Chu, founder of cryptocurrency-focused venture capital and trading firm Kenetic Capital.

More selling ahead?

Bitcoin’s fall below $30,000 could be important, according to Ayyar, who said the sell-off could go lower to test the $22,000 to $24,000 level.

From then on, bitcoin could trade in a range.

“I would see bitcoin between 20-40K ($20,000 to $40,000) for a while now before any bullishness returns,” Ayyar said.

Kinetic Capital’s Chu also sees potential selling ahead.

“Q1′s crypto market momentum has stalled and is threatening further reversal potentially below the $25K levels,” Chu said.

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