ether and dogecoin accelerated Tuesday, with concerns about heightened government intervention adding to recent pressure on cryptocurrencies.
Bitcoin slid about 10% before recovering a bit to trade near $32,400, according to CoinDesk, down around 50% from its all-time high and near spring lows. Ether slipped more than 12% to $2,327.50 and joke cryptocurrency dogecoin—a favorite of individual investors—tumbled more than 13% to trade near 30 U.S. cents.
Bitcoin traders are “falling out of love once again,” said AvaTrade analyst
“and it seems like the bulls are losing more ground.”
The recent skid marks a reversal after bitcoin rallied to more than $64,000 in April—doubling in price in less than four months and attracting a new wave of retail and institutional investors.
Billionaire hedge-fund manager
Paul Tudor Jones
has disclosed bitcoin holdings.
bought $1.5 billion worth.
Coinbase Global Inc.,
the largest U.S. exchange, saw its user base rise to about 56 million in the first quarter from 34 million a year earlier.
Unlike stocks, bonds or commodities, cryptocurrencies don’t have any kind of fundamentals off which to base a fair value, so bitcoin and its brethren tend to swing with investors’ sentiment. And since early spring, that momentum has faded. Bitcoin traded as low as $30,201.96 on May 19—more than 50% off its record high—and not far off Tuesday’s low of about $31,035.
“We are seeing a pullback after a massive run-up,” said
a strategist at cryptocurrency exchange LMAX Digital.
One factor driving that reversal: worries that the rise in use of bitcoin and other assets could lead to stricter oversight and involvement by regulators. The Justice Department on Monday said that it had recovered 64 bitcoin, valued then at roughly $2.3 million, from hackers who hit a major East Coast fuel pipeline with a ransomware attack last month. It is a sign that regulators are stepping up efforts to combat ransomware attacks that rely on bitcoin.
The Justice Department said it got a seizure warrant from a California judge who allowed it to capture the bitcoin from the account, or “wallet,” holding the funds. It is not clear, though, whether the extortionists or an exchange controlled the wallet. Some exchanges, such as Coinbase, will work with law enforcement when served with subpoenas, warrants or court orders.
The aggressive efforts of the Justice Department reflect the urgency elected officials have about the subject. On Monday, President Biden’s national security adviser,
said the role of cryptocurrency in ransomware attacks needed to be a priority at the next G-7 summit.
Meanwhile, the Chinese government has been stepping up its regulatory crackdown, where a push to rein in its domestic bitcoin businesses is putting pressure on the industry.
The selloff also followed comments made by former President Trump on Monday that bitcoin “seems like a scam” and competes with the U.S. dollar, which he said should be “the currency of the world,” in an interview with Fox Business Network.
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