Bitcoin and other cryptocurrencies plummeted today, Friday, wiping out over $260 billion from the cryptocurrency market's value. Bitcoin dropped nearly 10% in the last 24 hours, trading at $49,281.40, according to CoinDesk data. Ethereum also fell to $2,202.05, losing more than 11%. Ripple, the fifth largest cryptocurrency, declined by over 22%, according to price tracking site CoinMarketCap. This wiped out about $260 billion from the total cryptocurrency market capitalization.
The reason for the sell-off was unclear, although cryptocurrencies are known for their massive price volatility. On Thursday, U.S. stock indices fell following reports that President Joe Biden is considering increasing capital gains taxes, and the broader decline in the stock market may impact all risk assets.
So far this year, Bitcoin has risen by 71% and Ethereum by 200%. Part of this support is attributed to increased Bitcoin purchases by institutional investors, with companies like Tesla and Square buying billions of dollars worth of Bitcoin. Banks are also seeking to allow their clients to participate in the Bitcoin market. In March, Morgan Stanley announced it had started accessing three funds enabling Bitcoin ownership, as reported by CNBC.
However, concerns about regulatory crackdowns on Bitcoin continue to loom over the market. Jesse Powell, CEO of major cryptocurrency exchange Kraken, warned governments against pressuring the use of Bitcoin and other cryptocurrencies. Last month, Reuters reported that India plans to introduce legislation to ban trading or even owning cryptocurrencies. In February, U.S. Treasury Secretary Janet Yellen described Bitcoin as "an extremely speculative asset" and expressed concern about potential losses for investors. Authorities worldwide are exploring how to regulate digital currencies like Bitcoin. Last week, the Deputy Governor of the People's Bank of China referred to Bitcoin as an "investment alternative," representing a more progressive tone regarding cryptocurrencies after a fierce crackdown by regulators in the country in 2017 and 2018.
