(AF) Bitcoin recovered partially on Monday after a 13% slump at the weekend – despite qualified support from Tesla chief Elon Musk – after the world’s biggest and best-known cryptocurrency suffered another sell-off that left it down nearly 50% from the year’s high.
Bitcoin fell to $32,601 at 1800 GMT (2 pm ET), losing $4,899.54 from its previous close. It hit a high for the year of $64,895.22 on April 14. It later recovered during the Asia day to trade at $35,292 in mid-morning, down 7.4% over the previous 24 hours.
Ether, the coin linked to the ethereum blockchain network, dropped 17% to $1,905 on Sunday, losing $391.31 from its previous close. It was still down 8% in mid-morning Asia time.
Musk tweeted general support for crypto, writing that the “true battle is between fiat & crypto. On balance, I support the latter,” he said.
Bitcoin markets operate 24/7, setting the stage for price swings at unpredictable hours and analysts said cryptocurrency was inherently volatile and investors would need strong stomachs.
“The plunge in crypto markets may have you feeling rattled, but use it as a wake-up call to re-assess why you’re involved in the market to begin with,” said James Royal, an analyst at Bankrate in Washington.
“While Bitcoin, for one, has rallied back hard following previous major declines, there’s no guarantee that it does so again,” he added.
“And that’s the kind of real risk that an investment can be destroyed by or profit from, if the reality is less severe than the expectation.”
UNDER PRESSURE
Bitcoin had been under pressure after a series of tweets last week by Musk, chiefly his reversal on Tesla accepting bitcoin as payment.
In addition, on Friday China cracked down on mining and trading of the largest cryptocurrency as part of ongoing efforts to prevent speculative and financial risks.
Beijing’s Financial Stability and Development Committee, chaired by Vice Premier Liu He, singled out bitcoin as the asset it needs to regulate more.
The statement, which came days after three Chinese industry bodies tightened a ban on banks and payment companies providing crypto-related services, was a sharp escalation of the country’s push to stamp out speculation and fraud in virtual currencies.
Cryptocurrency mining operators Huobi Mall and BTC.TOP said on Monday they would suspend their China operations.
Huobi Mall, part of cryptocurrency exchange Huobi, said its custody business has been suspended. BTC.TOP, a crypto mining pool, also announced the suspension of its China business citing regulatory risks.
China’s latest campaign against crypto came after the US Treasury Department called for new rules that would require large cryptocurrency transfers to be reported to the Internal Revenue Service.
The US Federal Reserve also flagged the risks cryptocurrencies posed to financial stability.
“Many point to bitcoin’s volatility as untenable,” RBC Capital Markets’ Amy Wu Silverman said in a research note published on Saturday. “Indeed, Bitcoin makes severe and dizzying swings.”
UBS added that investors should treat cryptos, such as bitcoin, as a speculative asset.
“The basic functions of a modern currency are to store value and as a medium of exchange,” Mark Haefele, head of investment at the bank’s US wealth management arm, said. “The high volatility of cryptos makes them an unreliable store of value.”
With reporting by Reuters
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