Bitcoin: Martin Lewis gives advice on cryptocurrencies
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Bitcoin plunged to just over $30,000 on Wednesday (May 19) afternoon; its lowest value since January, earlier this year. It’s believed that the sudden fall was linked to China’s decision to ban financial institutions from providing services related to cryptocurrency transactions.
Bitcoin had one of its worst days in recent months on Wednesday, after a sudden crash in the crypto market.
BTC started the day trading at about $43,196 – which was still much lower than it had been just one month ago.
Within the space of 14 hours, bitcoin plunged to $31,926 – a marked drop of about 26 percent.
The price fall was even more shocking, given bitcoin reached its all-time high value of close to $65,000 just last month.
The latest cryptocurrency market crash has been linked to China’s decision to clamp down on crypto trading.
China banned all financial institutions – including banks – from offering their clients any services involving cryptocurrencies.
It also banned exchanges between cryptocurrencies, but didn’t bar individuals from holding the digital currency.
While bitcoin – and cryptocurrency in general – is always volatile, and tends to fluctuate over a short space of time, an analyst has warned that the current price drop may be here to stay.
He urged the “overwhelming majority” of amateur investors to steer clear of all cryptos – including bitcoin.
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“This time around the drop in Bitcoin is not merely to do with an Elon Musk mark manipulation tweet, but rather China’s crackdown,” said ADL Estate Planning’s Private Client Wealth Manager, Mohammad Uz-Zaman.
He told Express.co.uk: “And consider the fact China powers nearly 80 percent of the global cryptocurrencies trade, it’s likely we’re going to see a sustainable loss.
“Remember cryptos have no utility, the market is driven solely by short-term investor speculation who have got far too much time on their hands due to being cooped up at home these past 18 months. A major brokerage tells us that most investors are novices.
“Cryptos are unlikely to ever become legitimate currency due to the risk they will pose to governments and international relations.
“Our advice is in line with the regulator, all cryptos are highly risky and should generally be avoided by the overwhelming majority of retail customers.”
Three of China’s financial industry bodies made a statement about cryptocurrency on Wednesday morning (UK time).
The National Internet Finance Association of China, the China Banking Association, and the Payment and Clearing Association of China, all made it clear that cryptocurrencies aren’t a sustainable investment strategy, and could even be dangerous.
They said: “Recently, cryptocurrency 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.”
Bitcoin wasn’t the only cryptocurrency to suffer from the market crash, however.
Ethereum, the second-largest type of crypto, was down by about 25 percent in Wednesday trading.
Dogecoin prices fell by almost a third, while XRP crashed by 28 percent.
Uniswap saw the largest fall in value, by an estimated 46 percent.
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