THE cryptocurrency market has crashed again, proving the volatile nature of coins like Bitcoin, Dogecoin and Etherum.
The price of Bitcoin, the biggest cryptocurrency on the market, is down more than 4% over the past 24 hours.
The market has plummeted after China announced a further crackdown on cryptocurrencies.
The price of Bitcoin – the largest cryptocurrency – is currently around $32,885 – down by 4.52% since yesterday according to Coinmarketcap.
It has fallen 18.91% over the past seven days and has nearly halved in value since it reached $64,000 in April.
5 risks of crypto investments
THE Financial Conduct Authority (FCA) has warned people about the risks of investing in cryptocurrencies.
- Consumer protection: Some investments advertising high returns based on cryptoassets may not be subject to regulation beyond anti-money laundering requirements.
- Price volatility: Significant price volatility in cryptoassets, combined with the inherent difficulties of valuing cryptoassets reliably, places consumers at a high risk of losses.
- Product complexity: The complexity of some products and services relating to cryptoassets can make it hard for consumers to understand the risks. There is no guarantee that cryptoassets can be converted back into cash. Converting a cryptoasset back to cash depends on demand and supply existing in the market.
- Charges and fees: Consumers should consider the impact of fees and charges on their investment which may be more than those for regulated investment products.
- Marketing materials: Firms may overstate the returns of products or understate the risks involved.
The second biggest cryptocurrency Etheruem has aslo dropped in value in the last 24 hours and so have other popular coins like Dogecoin, Cardano and XRP.
It comes after China signalled a further crackdown on cryptocurrency mining – the energy intensive method of creating new coins.
Beijing had previously said it will block crypto exchanges and initial coin offerings.
It came as part of a series of hammer blows to a number of coins.
Iran has banned the mining of cryptocurrencies including Bitcoin for nearly four months because the country faces major blackouts and mining uses lots of power.
China's northern region of Inner Mongolia is also ramping up its campaign against Bitcoin as it plans to end all cryptocurrency mining projects.
What is Bitcoin?
BITCOIN got you baffled? Here’s what you need to know:
- Bitcoin is a virtual currency
- It's traded between people without the help of a bank
- Every transaction is recorded in a public ledger, or "blockchain"
- Bitcoin is created by mining
- Mining involves solving difficult maths problems using computer processors
- Bitcoin can be traded anonymously, which can make it a popular way of funding illegal activities
- The value of Bitcoin fluctuates wildly
- Bitcoin is one of many different cryptocurrencies, but by far the most popular
Meanwhile, poster adverts for cryptocurrency platform Luno have been banned for failing to mention the risk of Bitcoin investments.
This extreme volatility and the accompanying sudden market falls are just one of the reasons that investing in cryptocurrency is a very risky business.
You can be left with less money than you put in, and the markets can shift in the blink of an eye.
You might not be able to access your investment if platforms go down and you could be left unable to convert crypto into cash.
There have also been warnings around scams related to cryptocurrencies, with people losing vast sums of money.
You should never invest in something you don’t understand and you should never put in money that you can't afford to lose entirely.
Which cryptocurrency prices are down?
Bitcoin, the most popular cryptocurrency, is currently trading at $32,885 – down by 4.52% since yesterday according to Coinmarketcap.
Other cryptocurrencies, such as Ethereum and Dogecoin, have also crashed.
Ethereum, the second-largest cryptocurrency, is down 5.72% over the past 24 hours at $1,997, while Dogecoin is down 16.94% at $0.225.
Dogecoin's rival, Shiba Inu, is down 7.23% at $0.0000005531.
Why are crypto markets down?
Crypto markets are down today following the latest crackdown in China, with many mining regions reducing operations.
Miners create new cryptocurrencies using a complex computer code in a complex process, which is highly energy intensive and requires a lot of computer power.
Authorities in the China's southwest province of Sichuan ordered crypto-mining projects to close last Friday.
Last month, Beijing declared war on Bitcoin mining and trading as part of a series of measures to control financial risks.
It follows a series of blows to the cryptocurrency market.
The first signs of trouble came last month, when Elon Musk released a statement saying Tesla would no longer be accepting Bitcoin for purchasing vehicles.
The Tesla CEO has previously caused currencies to spike in value by mentioning them on Twitter or in press statements.
Posting to his personal Twitter account, he wrote: "We are concerned about rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel."
Within minutes Bitcoin started plummeting. Other cryptocurrencies quickly followed, with several of the mainstream coins seeing a huge drop in value.
Coins took another big blow in April when Turkey's central bank banned the use of cryptocurrencies for purchases.
From Dogecoin and Litecoin to Bitcoin – here are the different cryptocurrencies explained.
Mastercard will allow payments in cryptocurrencies like Bitcoin later this year.
Meanwhile, Rishi Sunak is setting up a taskforce to explore the option of launching a UK digital currency dubbed "Britcoin".
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