Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown shares her views on the current state of Bitcoin following a tumultuous few days.
Bitcoin has been blessed with a bit of Monday motivation, creeping back up after a big dose of the Sunday blues which saw the cryptocurrency fall to just above 31 thousand dollars.
Its value more than halved compared to the high it reached above $63,000 in mid-April. But since yesterday’s low, it’s risen by around 17%, marking yet another sharp twist in its highly volatile journey.
The crackdown in China is intensifying with cryptocurrency mining the latest target.
The suspension of operations of major players, sent shudders through the market with bulging crypto wallets becoming distinctly thinner as other cryptos like Ethereum, Dogecoin and Binance Coin also fell sharply in value.
Crypto holders who are hoping for a bounce back from the initial sharp fall last Wednesday have been left sorely disappointed.
It’s become clear Beijing’s stance isn’t a one-off warning but the beginnings of a serious attempt to limit the decentralised power of cryptocurrencies.
Already the ban on Chinese banks and payment firms from providing crypto transaction services had been a major set-back for Bitcoin’s use case.
Although the first blow has come from China, central bank fists are at the ready elsewhere. In the US, Jerome Powell, the head of the US Federal Reserve said last week that cryptocurrencies pose a significant risk to financial stability, suggesting greater regulation may be necessary.
Another drag on the price could come amid mounting concerns about the amount of energy being used to mine cryptocurrencies. That could also lead institutions around the world, who have bought into Bitcoin to reduce their holdings, leading to fresh falls.
The direction of travel though is far from clear, as despite the rollercoaster ride, some crypto fans have buckled up see the recent falls as an opportunity to buy into currencies like Bitcoin at a cheaper price.
Given the huge volatility and that the use case of cryptocurrencies is far from proven, traders should only dabble with money they can afford to lose.