Cryptocurrency rally cools off as tighter regulations loom, leaving bitcoin heading for its biggest monthly drop since November 2018
The recovery in the cryptocurrency market ran out of steam on Thursday, with traders cashing in on the rally that began earlier this week, as regulators and governments honed in on the sector, with Iran implementing a temporary ban on mining for digital assets the previous day.
Coins across the board stumbled in the 24 hours to Thursday in the Europe morning, with many major cryptocurrencies falling by around 5% based on Coingecko data. Bitcoin fell 4.9% in the 24 hours to 04:15 E.T., when it was trading at $38,336.14. Bitcoin had reached record highs in April, but has since lost over 40% of its value based on its Thursday valuation.
The world’s biggest cryptocurrency is on track to reach its largest monthly drop since November 2018 this month. Since the start of the month, bitcoin has declined by almost 34%, almost matching the 37% decline of November 2018.
The second largest cryptocurrency ether was down by 4% in the 24 hours to Thursday midday in Europe and was valued at $2,738.64. It reached record highs earlier this month and has lost 37.5% in the past two weeks alone.
Smaller coins followed suit as binance’s BNB token was down 5.3%, XRP lost 4.9% and dogecoin dipped by 6.3% in the 24 hours to 04:15 E.T. on Thursday.
The cryptocurrency market has been cooling off in recent weeks as an increasing number of governments and regulators have indicated that tighter restrictions and rules could be imminent, which has rattled crypto investors.
Most recently, Iran had banned crypto mining for the upcoming summer months over fears of electricity shortages. Several blackouts had occurred in recent weeks as the country’s electricity network became overloaded.
China has been leading the crackdown on crypto mining and trading, which caused several crypto firms to halt operations in the region earlier this week. In the US, SEC Chairman Gary Gensler reiterated the authority would be prepared to fight bad actors in the crypto industry. Security and environmental concerns as well as investor protection have been cited as reasons for the increased regulatory attention.
Environmental concerns also caused Elon Musk’s Tesla to halt bitcoin payments this month after pioneering the use of cryptocurrencies as a form of payment for goods and services.
Despite these headwinds, the crypto market may be on the road to recovery.
“Overall, the crypto markets look to cap off a busy and volatile month next week and potentially leave behind the bearish price action seen with it. After all, despite the high volatility, Bitcoin’s sentiment among traders appears largely unfazed, with many calling it a “buy the dip” opportunity,” Thomas Westwater, analyst for DailyFX.com, said about the future of crypto.