On Tuesday, Bitcoin fell sharply, continuing a significant sell-off that started a week ago.
According to CoinDesk data, the digital currency fell over 14% to hit a low of $38,585.87 at around 12:55 a.m. ET. Since February 9, it was the lowest level, the last time it dropped below $40,100.
Over the past week, negative news dampened sentiment for bitcoin.
On May 12, Elon Musk tweeted that Tesla suspended car purchases using bitcoin, citing environmental concerns over the computational mining process. This announcement about suspending bitcoin payment came just three months after Tesla released news that it bought $1.5 billion worth of bitcoin and planning to start accepting bitcoin in exchange for its cars.
Earlier this week, the Tesla CEO tweeted that the company had not sold any Bitcoin.
On Tuesday, three Chinese payment industry and banking bodies issued a statement warning financial institutions not to cooperate with virtual currency-related businesses. That includes exchanging or trading fiat currency for cryptocurrency.
The hard-line of China on digital currencies is not new. In 2017, authorities banned initial coin offerings and shut down local cryptocurrency exchanges. That was a way for companies in the space to raise money by issuing new digital tokens.
Traders in China once accounted for a considerable share of the bitcoin market. However, their influence began to reduce significantly after the crackdown. Chinese cryptocurrency operations decided to move abroad.
Bitcoin is still up more than 45% and 325% in the last 12 months.
Overview of The Market
Other cryptocurrencies plunged as well. Ether is the digital currency that powers the Ethereum blockchain, which was down close to 16% at $3,001.80 at 1:16 a.m. ET. According to Coinmarketcap.com, Dogecoin is a cryptocurrency that started as a joke. Doge fell over 18% to $0.4077 after Musk talked.
Around $279.66 billion had been wiped off the cryptocurrency market in 24 hours as of 1:19 a.m. ET.
Bitcoin is off by around 38% from its high of $64,828.14.
The head of business development at cryptocurrency exchange Luno, Vijay Ayyar, said that a 35% to 45% pullback seems normal during bitcoin bull markets. He added that this is expected after they topped out at 65K.
Ayyar pointed to a 36% correction in January and similar falls during the massive run-up in bitcoin’s price four years ago.
On Tuesday, Mike Novogratz, Bitcoin bull, told CNBC that he considers the price of Bitcoin as a buying level for the digital currency.