Bitcoin prices fell sharply amid the global sell-off in equities.
Luke MacGregor | Bloomberg | Getty Images
Bitcoin fell below $37,000 for the first time in over three months on Wednesday, continuing a major sell-off that began a week ago.
The digital currency was down 20% in the last 24 hours, according to Coinbase. The cryptocurrency hit an intraday low of around $36,189 at 7:30 a.m. ET. It was the lowest level since early February. Bitcoin is down more than 30% in the last week, according to Coinbase.
That means bitcoin has now erased all its gains following Tesla’s announcement that it would purchase $1.5 billion worth of the cryptocurrency. It’s also down about 44% since hitting a record high of $64,829 in mid-April.
Negative news over the past week has dampened sentiment for bitcoin.
On May 12, Tesla CEO Elon Musk said the electric carmaker had suspended vehicle purchases using bitcoin, citing environmental concerns over the so-called computational “mining” process. This is where high-powered computers are used to solve complex mathematical puzzles to enable transactions using bitcoin.
Musk’s comments caused over $300 billion to be wiped off the entire cryptocurrency market that day.
The announcement to suspend bitcoin payments came just three months after Tesla revealed that it bought $1.5 billion worth of bitcoin, and would start accepting bitcoin in exchange for its products.
Then on Tuesday, three Chinese banking and payment industry bodies issued a statement warning financial institutions not to conduct virtual currency related business, including trading or exchanging fiat currency for cryptocurrency.
China’s hard line on digital currencies is not new. In 2017, authorities shut down local cryptocurrency exchanges and banned so-called initial coin offerings (ICOs), a way for companies in the space to raise money through issuing new digital tokens.
Traders in China once accounted for a huge share of the bitcoin market but after the crackdown, their influence was reduced significantly. Chinese cryptocurrency operations have moved abroad.
“The crypto markets are currently processing a cascade of news that fuel the bear case for price development,” said Ulrik Lykke, executive director at crypto hedge fund ARK36.
More than $250 billion evaporated from the bitcoin market alone last week, Lykke said. Though that number seems “astronomical,” such moves aren’t uncommon in the volatile crypto market, he added.
“In terms of Bitcoin’s outlook, things may be looking grim right now, but historically this is just yet another hurdle for Bitcoin to overcome and a small one compared to what it has braved in the past,” said Lykke.
Bitcoin is still up over 30% year-to-date and around 300% in the last 12 months.
Other cryptocurrencies also plunged. Ether, the digital currency that powers the Ethereum blockchain, was down nearly 23% at $2,697. Dogecoin, a cryptocurrency that started as a joke and has been talked up by Musk, fell 27% to 37 cents.
More than $380 billion has now been wiped off the entire value of the cryptocurrency market in just 24 hours.