The majority of leading cryptocurrencies are suffering from the latest market crash on 13 June 2022.
Bitcoin Ethereum and other leading crypto currencies saw their values plummet in the latest market crash to hit traders and investors around the world.
It comes after many cryptocurrencies enjoyed record highs at moments throughout 2021, with one Bitcoin token reaching a price of £50,546.71 recently before significant dips.
A summer crash 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.”
China has since ordered Bitcoin mining in its Sichuan province to shut down completely and told banks to stop supporting crypto transactions, in a latest wave of restrictions on cryptos which have seen prices tumble.
What price did Bitcoin drop to?
The crash saw the price of Bitcoin plummet to below half of its record high
The drop in price was significant and was level with December 2020 levels before the crypto enjoyed a fruitful 2021 which saw its value skyrocket.
Its valuation was initially 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 - and fellow digital currencies.
Ethereum experienced a 35.56% drop, Binance Coin dropped 45.20%, Dogecoin was down 35.12%, Uniswap -45.42% and Litecoin -44.55%, according to coinmarketcap.com.
There have been fluctuations since, with a 13.88% market drop in the 24 hours prior to 11.30am on Monday 13 June 2022.
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 astronomically while the volatility of the market is still evident with several crashes in values.
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 65,800.91% since February 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.”