The cryptocurrency market, led by Bitcoin, fell dramatically over the course of 24 hours for a loss of around $90 billion by Tuesday morning, according to CoinMarketCap data.
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During the dive, Bitcoin fell by about 6 percent, reaching below $30,000 for the first time since June 22. This also marks a more than 50 percent drop from Bitcoin’s all-time high of $65,000.
The Bitcoin fall also affected the rest of the cyptocurrency market. Altcoins had a loss of roughly 10 percent, and Ethereum fell to $1,700 in an 8 percent drop. XRP, BNB and ADA suffered steeper falls, with each losing more than 10 percent.
CNBC reported on Tuesday that Bitcoin has been hurt by larger sell-off in global stock markets. The Dow Jones Industrial Average recorded its worst day since last October on Monday, and Bitcoin is said to have still felt the damage from the traditional market losses.
Concerns about the prospects of the country’s economic recovery were also cited as a cause, with Bitcoin’s status as a non-traditional currency making it appear more risky to investors.
Investors could also be responding to the renewed pressure from Washington regarding stablecoins. On Friday, U.S. Department of the Treasury Secretary Janet Yellen said the agency expects to issue recommendations on stablecoins in the coming months, and financial regulators met on Monday to discuss stablecoins.
Stablecoins are cryptocurrencies or digital tokens that derive their value from underlying currency or other assets, and many stablecoin companies claim its currency has one-to-one value with dollars. Popular examples include Tether and Binance, and Facebook is reportedly planning to announce the launch of a company-backed stablecoin in 2021.
The group that met on Monday included Jerome H. Powell, the chair of the Federal Reserve, and the leaders of the Securities and Exchange Commission and the Commodity Futures Trading Commission. The heads of the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation were also present.
A press statement from the Treasury following the meeting said the participants “discussed the rapid growth of stablecoins, potential uses of stablecoins as a means of payment, and potential risks to end-users, the financial system, and national security.”
The statement added that Yellen “underscored the need to act quickly to ensure there is an appropriate U.S. regulatory framework in place.”
Buying cryptocurrencies with standard currencies is seen by some experts as inconvenient, whereas stablecoins are said to make the process easier. But Monday’s meeting underscored the concern among governments and large banks about the risks stablecoins present for illegal activities like money laundering, which could then affect monetary policy as a whole.
The Treasury said the group expects for stablecoins to issue recommendations in the near future, while the the central bank is also looking into a digital currency offering.
The Bitcoin price also continues to be impacted by the crackdown in China on cryptocurrency trading and mining. The country continues to shut down energy-draining mining operations and China’s central bank has warned finance companies not to offer cryptocurrency-related services.
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