A crash of the crypto market saw the price of many leading digital currencies drop significantly on the morning of 8 June.
Bitcoin, Ethereum and other leading crypto currencies saw their values plummet between 10% and 15% overnight in the latest market crash.
It comes after many cryptocurrencies enjoyed record highs in April, with one Bitcoin token reaching a price of £47,240.05 before drops in May and June.
The fall was sparked by Tesla’s decision to no longer accept Bitcoin as payment for its products - three months after the electric car company bought $1.5b (£1.06b) of the crypto.
Tesla CEO Elon Musk announced on Twitter the company was making a u-turn on its policy to accept the crypto over environmental concerns in relation to Bitcoin’s mining process.
Its impact was far reaching with other cryptocurrencies Ethereum, Binance Coin, Dogecoin, XRP and Litecoin among the worst affected.
Why did the crypto market crash?
Following Tesla’s decision, the market was already experiencing a turbulent time before China announced a clampdown on cryptocurrencies which saw prices plummet.
China banned all of its banks and financial institutions from offering clients any services involving cryptocurrencies, which included coin offerings and transactions.
The country’s financial industry bodies also warned against speculative trading.
The National Internet Finance Association of China, the China Banking Association, and the Payment and Clearing Association of China released a combined statement.
It read: “Recently, cryptocurrency 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.”
The impact saw crypto prices tumble.
What price did Bitcoin drop to?
The crash saw the price of Bitcoin plummet to £20,000 at around 2pm on 19 May - less than half the value from its record high of £47,240.05 on 14 April 2021.
The drop in price was significant and was level with mid-January 2021 levels before the crypto enjoyed a fruitful three months which saw its value skyrocket.
Its valuation was boosted by the news that Tesla had bought $1.5b (£1.06b) of Bitcoin shares, which in turn sent the market price of both the crypto and Tesla soaring.
Yet Tesla’s decision to reverse its policy to accept Bitcoin as payment for its products sparked a downward spiral for the crypto - 21.43% down this last week - and fellow digital currencies.
And, just as the market was showing signs of recovering, the 8 June crash saw Bitcoin lose 10.33%, Ethereum drop 11.82%, Cardano plummet 13.15%, XRP go 11.66% and Dogecoin losing 12.32%.
Will the crypto market recover - and when?
It’s the question on everyone’s lips at the moment.
Will the crypto market recover, when and is now a good time to stick or twist?
There are differing opinions and a wide range of answers to those questions so be sure to do what’s best for you and your individual circumstances.
Over the course of the last year, Bitcoin has seen its value surge 197.03% - even when you take into account the crypto crashes of 19 May and 8 June - according to Coinbase.
The overall price at present is nowhere near the record highs the cryptocurrency enjoyed mid-April but is still up on this time last year - and by some distance.
Zooming out further, the price of Bitcoin has soared by 34,381.49% since this time in 2014.
Alexander Vasiliev, co-founder of global payment network Mercuryo, said in an article in the Independent: “At this rate of fall, bitcoin is likely to see support at $40,000 [£28316.20] if the selling continues, and surviving this fundamental onslaught can set a new run that will create a new all-time high of $70,000 [£49,553.35] in the mid-to-long term.”
Yet this view is not shared by Kevin Brown, a savings and investment specialist at Scottish Friendly, who warned against investing for anyone who doesn’t understand the market.
“The level of volatility means that savers who choose to invest in cryptocurrencies must be prepared to lose all their money,” he said.
“At least when you are at the bookies you have a real chance of understanding the outcome and probabilities if you know the horses or football.”
What has Tesla done with its Bitcoin holding?
Meanwhile, it’s worth remembering Tesla is still in possession of its Bitcoin holdings, despite its environmental concerns, as confirmed by Elon Musk on Twitter.
In response to criticism of Bitcoin’s drop in price, Musk said: “To clarify speculation, Tesla has not sold any Bitcoin.”