After a year of gains and record highs, cryptocurrency markets are enduring a turbulent time of late.
Leading crypto currencies including Bitcoin and Ethereum have seen their share prices drop between 10% and 15% overnight on the morning of 8 June.
Bitcoin lost 10.33%, Ethereum dropped 11.82%, Cardano plummeted 13.15%, XRP went 11.66% and Dogecoin reported losses of 12.32%, according to coinmarketcap.com.
It follows a crash in mid-May following the decision by Tesla to no longer accept Bitcoin as payment for its vehicles, as announced by the car company’s CEO Elon Musk.
Musk’s shock post on Twitter had an immediate impact on Bitcoin’s value, which dropped $6 billion (£4.26b) and sent shockwaves through the crypto market.
Cryptos took another hit when China said it was going to block initial coin offerings, block exchanges and warned against speculative trading.
A further blow was dealt when China mining operators suspended their operations in the country which accounts for nearly 70% of the world’s cryptocurrency mining.
This is what’s going on in the world of cryptocurrencies...
Why is the crypto market down?
China’s crackdown on cryptos comes days after Musk’s shock announcement.
Musk’s decision signifies a sharp u-turn for Tesla who only started accepting Bitcoin as payment for its services in February 2021.
It came after the electric car company bought $1.5b (£1.06b) of Bitcoin shares, which in turn sent the market price of both the crypto and Tesla soaring.
Yet the impact on the environment of Bitcoin mining - a complicated process of minting new digital tokens - has seen Tesla withdraw this option for customers.
The billionaire entrepreneur said: “We are concerned about rapidly increasing use of fossil fuel for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel.”
Musk reaffirmed his belief that cryptocurrency has a “promising future” but that it “cannot come at great cost to the environment”, in his Twitter post.
Musk has been a long-time advocate of cryptocurrencies and the Tesla decision was felt across the market, with other digital tokens going down in price.
What is the price of Bitcoin and Ethereum?
At the time of writing, the current price of Bitcoin is £25,874.52 according to Coinbase.
The drop in price has halted, however, with the crypto increasing 4.01% in the last 24 hours as the market continues to recover from blows dished out by Tesla and China.
In the last 24 hours, Ethereum has risen 10.80% to a value of £1,620.89.
Cryptocurrencies are seen as an alternative to traditional banking methods, cheaper to move money around due to not being regulated by the government or its banks.
The decision by Tesla, and announced by Musk, was seen by some as a slight on the credibility of cryptos to become a viable method of payment against physical currencies.
Which crypto prices are down?
Bitcoin wasn’t the only cryptocurrency to feel the initial effects.
Another one of the big digital tokens, Ethereum, also experienced a fall in market value along with Binance Coin (-32.42%), XRP (-26.86%), Uniswap (-33.55%), Litecoin (-36.32%) and Chainlink (-23.88%) in the wake of decisions from Tesla and China.
Dogecoin had held its own, briefly, and largely thanks to Musk’s continued support of the crypto which was initially set up as a joke in 2012 before seeing its shares skyrocket.
But even Doge had seen a drop in value to £0.23p.
Musk’s influence cannot be underestimated as, even though the likes of PayPal, Mastercard and Facebook have backed cryptos, the Tesla announcement still rocked the market.