Nearly $90 billion wiped off crypto market as bitcoin drops below $30,000

A representations of virtual currency Bitcoin is seen in front of a stock graph in this illustration taken May 19, 2021.

Dado Ruvic | Reuters

Bitcoin fell below $30,000 for the first time since Jun. 22 dragging other digital coins lower.

About $89 billion was wiped off the entire cryptocurrency market in 24 hours as of 6:29 a.m. ET on Tuesday, according to CoinMarketCap data.

Bitcoin was down more than 5% while ether fell over 6% and XRP sank almost 9%, according to CoinDesk data. Even with the plunge bitcoin is up 1.87% for the year. Ether and XRP are both up about 135% for the year.

The plunge in bitcoin came after a big sell-off in global stock markets. On Monday, the Dow Jones Industrial Average had its worst day since last October.

“There’s been a broad sell-off in global markets, risk assets are down across the board,” Annabelle Huang, partner at cryptocurrency financial services firm Amber Group, said.

There are “concerns of the quality and strength of economic recovery” and “broader risk assets turned weaker including high yields,” Huang said. “Coupled with recent BTC (bitcoin) weakness, this just sent crypto market down further.”

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Since bitcoin’s all-time high of nearly $65,000 in mid-April, its price has plunged over 50%.

Regulatory scrutiny

Regulators around the world are also looking more closely at the crypto space.

Binance, the world’s largest cryptocurrency exchange, last month was barred by U.K. authorities from carrying out any regulated activities in the country. Regulators in Japan, Canada and Thailand have also issued warnings about Binance.

“In general we’re seeing more regulatory focus on crypto and bitcoin,” said Vijay Ayyar, head of business development at cryptocurrency exchange Luno.

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.

(With Inputs from cnbc)

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