Just 4 days after peaking at $ 64,800/dong on April 14, Bitcoin’s price plunged 15%. As of April 19, the world’s most popular cryptocurrency was trading around $ 57,000 per coin, up slightly by 0.46 percent from a day earlier, according to Coin Desk data.
However, the price is still down more than 12% from its peak. Bitcoin’s market cap dropped to $ 1,070 billion.
The Coinbase bomb
The price of Bitcoin and other cryptocurrencies all increased dramatically before crypto exchange Coinbase went public (IPO). Last weekend, Coinbase’s market cap hit $ 68 billion, larger than the company that owns the New York Stock Exchange.
Michael Novogratz, the founder of Galaxy Digital, said the crypto price crash was an inevitable investment risk. The markets were too excited about the Coinbase IPO, “he added.
On April 18, a source of Bloomberg said that cryptocurrency prices fell due to the US Treasury Department may tighten controls on money laundering through digital assets. Last week, US Federal Reserve Chairman Jerome Powell said Bitcoin is “a bit like gold” as a means of speculation rather than a payment.
The US Treasury Department declined Bloomberg’s request for comment. The US Financial Crimes Network (FinCEN) said it “did not comment on possible investigations.”
Optimism brings investment risks
“Dogecoin’s 100% Friday rally was ‘peak party,’ after the Bitcoin record and Coinbase listing earlier in the week. Euphoria was in the air. And usually, in the crypto world, there’s a price to pay when that happens,” said Antoni Trenchev, co-founder of crypto lender Nexo.
He said there was “no basis” on the tightening of controls by the US Treasury Department. Trenchev explained that the slippage could be caused by “excessive leverage” and a mass outage in Xinjiang province, which affects Bitcoin mining companies.
Bitcoin price increased 800% over the past year. The coin is receiving more and more attention from the big names of Wall Street. Elon Musk’s electric car company Tesla has invested $ 1.5 billion in Bitcoin and accepts payments with the cryptocurrency.
On March 31, Goldman Sachs said it was looking to expand its investments in Bitcoin and other technical assets towards wealthy investors. Meanwhile, Paypal Inc. and Visa Inc. have begun to use cryptocurrencies as part of the checkout process.
Proponents of Bitcoin claim that the currency is a form of “digital gold”, while others fear the Bitcoin bubble has been overblown, investing in the currency entails a lot of investment risks.
In January, European Central Bank President Christine Lagarde criticized Bitcoin for facilitating illegal activities. Turkey’s central bank also banned the use of cryptocurrencies as a form of payment as of April 30.
According to a Reuters source, concerned about investment risks, India will enact laws to ban cryptocurrencies and penalize anyone from trading or holding these assets.
What is restraining Bitcoin?
The problem with the biggest impact on the virtual money market (also known as cryptocurrencies, digital currencies, cryptocurrencies) is the move of tightening regulation from countries.
In the latest move when virtual money is still on the upward trend, some governments such as the US, Europe … have called for tightening control over virtual money payment to avoid money flow falling into money laundering activities, terrorism financing…
It is the reason that causes the virtual currency market in general and Bitcoin, in particular, to drop sharply.
Over the past time, although Bitcoin has been accepted by large organizations and famous individuals to pay or participate in investments, the legal issues for this virtual currency in many countries are still almost unchanged, even increased control. For example, in India, the latest ban was introduced that does not allow payments in Bitcoin.
On investing.com, referring to Bitcoin, many investors are concerned about the investment risks when that virtual currency had overheated and there could be any bubble exploding.
Besides, some comments also advise that should not continue to buy Bitcoin at this time, but should wait until the “bubble burst” of Bitcoin price falls to the range of 40,000-45,000 USD to buy.