China Crackdown On Crypto Wipes $1 Trillion In Wealth As Ether Crashes 40%, Bitcoin Below $35k

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Cryptos in freefall after Reuters reported China banned financial institutions and payment companies from providing services related to cryptocurrency transactions.

By Tyler Durden for ZeroHedge News
© 2021 ZeroHedge News – All Rights Reserved

China Crackdown On Crypto Wipes $1 Trillion In Wealth As Ether Crashes 40%, Bitcoin Below $35k

Summary:

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Update (0900ET): Things escalated a little more since we first wrote this morning. Ethereum is the biggest loser, crashing below $2000 (briefly), down 40% on the day, and Bitcoin is testing $32k (down 25%)…

 

And that leaves total crypto market capitalization down over $1 trillion from its highs…

Coinbase has crashed 11% to a record low, well below its Reference price…

Gold is bid again as bitcoin is battered as JPMorgan notes that institutional investors appear to be shifting away from bitcoin and back into traditional gold, reversing the trend of the previous two quarters.

It is not clear what is driving this shift. Perhaps institutional investors are fleeing bitcoin as they see its previous two quarter uptrend ending and thus seek the stability of traditional gold away from the rapid downshifting of digital gold. Or they perhaps view the current bitcoin price as too high relative to gold and thus do the opposite of what they did in the previous two quarters, i.e. they sell bitcoin and buy gold.

 

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Well that escalated quickly…

Crypto markets are in freefall this morning after Reuters reported China has banned financial institutions and payment companies from providing services related to cryptocurrency transactions, and warned investors against speculative crypto trading.

It was China’s latest attempt to clamp down on what was a burgeoning digital trading market. Under the ban, such institutions, including banks and online payments channels, must not offer clients any service involving cryptocurrency, such as registration, trading, clearing and settlement, three industry bodies said in a joint statement on Tuesday.

“Recently, crypto currency prices have skyrocketed and plummeted, and speculative trading of cryptocurrency has rebounded, seriously infringing on the safety of people’s property and disrupting the normal economic and financial order,” they said in the statement.

The result is crypto carnage, but as many have noted, this is not ‘new’ news…

The total market cap of the cryptocurrency space has crashed by more than $800 billion since its peak last week, from over $2.5 trillion on May 12th to just above $1.7 trillion this morning (the lowest since March)…

Bitcoin has erased 50% of its gains from the start of the most recent rally (and found support there) after breaking below its 200DMA for the first time since March 2020…

Note that Bitcoin is back to the Feb 8th opening price, when Tesla made its Bitcoin announcement…

And Ethereum broke back below its 50DMA (and found support there)…

However, despite the full-frontal FUD assault that the crypto market has been under in recent weeks, many altcoins have seen their prices breakout over the past couple of days as traders rotate out of underperforming tokens and into tokens that have turned bullish.

The standout performance of the week goes to MATIC, the native token of Polygon, a rapidly rising Ethereum layer-two solution that has morphed into an oasis for traders looking for lower fees.

Other notable double-digit gainers include 40% gains for ARK and Celer Network’s CELR, as well as 20% gains for AAVE and Helium Network Token (HNT).

It’s not all FUD though as we note Bitcoin is still up 33% YTD and Ether up over 260%…

Bitcoin’s “dominance” of the crypto space has fallen below 40% for the first time since June 2018, as Ethereum’s share has risen to just below 20% (its highest since Feb 2018)…

CoinTelegraph reports that inflows of Bitcoin to major centralized exchanges soared during the past 24 hours. More coins were sent to trading posts than at any time since the “Black Thursday” crash of 2020 — a fact that led Lex Moskovski, chief investment officer of Moskovski Capital, to conclude“People are scared.”

With outflows from exchanges typically being inferred as indicating crypto assets are being moved into cold storage for security or DeFi protocols for yield generation, inflows are interpreted as assets being moved onto centralized platforms to be sold.

Additionally, CoinTelegraph notes that data from crypto data provider Glassnode shows that Bitcoin price drawdown has led to almost a quarter of unique on-chain entities being at a loss. This situation also bears some parallels to previous extreme downside price action periods that interrupted bullish advances.

Data also indicates roughly 35,000 Bitcoin worth more than $1.4 billion has been deposited on Binance in the past 48 hours.

“Feels like capitulation,” said Kraken growth lead Dan Held. Clemente replied: “Let’s see one final nasty liquidation wick.”

Finally, we note that Bitcoin has fallen below its ‘stock to flow’ fair value price…

Offering hope for some of a rebound back to $56,000 or more given the same magnitude drop in March 2020.

By Tyler Durden for ZeroHedge News
© 2021 ZeroHedge News – All Rights Reserved

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