Bitcoin is bearish today as traders anticipate the possibility of the U.S. changing the direction of its monetary policy and China’s continued tightening of cryptocurrency regulations.
The price of the world’s top cryptocurrency is bearish by over 8% today, trading at $32,900 from around $36,000, although prices appear to be recovering. The drop marks the largest single daily loss for the cryptocurrency since May 28, amid sell pressure propped by fading bullish investor sentiment.
The reason for this sell-off is the ongoing pressure from China on cryptocurrency mining operations and trading as the country goes after Weibo accounts of key opinion leaders in cryptocurrency. The country has blocked the accounts of these users saying the banned accounts violated Weibo guidelines and “relevant laws and regulations.”
Jehan Chu, managing partner at Hong Kong-based cryptocurrency investment firm, Kenetic Capital, stated, “China continues to pressure crypto with rolling mining bans wiping its most popular social media platform, Weibo, clean of crypto influencer accounts. This signals a tightening noose around crypto on the mainland.”
Markets worldwide have had a lot of FUD (Fear Uncertainty and Doubt) as investors eye the possibility that the U.S. Federal Reserve could begin to unwind from its liquidity-boosting quantitative easing program. Though some say tapering of U.S. monetary policy is unlikely to affect cryptocurrencies and gold, arguing those asset classes possess resilience.
Deutsche Bank, Germany’s largest lender, has said the U.S. could be in for one of its worst inflationary periods in history with government spending and loose monetary policy likely catalysts for creating conditions last seen in the 1940s and 1970s.
Jehan Chu stated, “While long-term fundamentals remain intact, U.S. monetary and macroeconomic policies are causing short-term jitters.”
Investors are now looking to offload some of their investments in hopes of entering at lower points as U.S. monetary and fiscal policy grows clearer.
Since Bitcoin is down, it should come as no surprise that other notable cryptos will go in the same trend. The top 10 by market capitalization have fallen between 8% and 13% over the last 24 hours. Polkadot and Dogecoin were the hardest hit of the top 10, down 13.74% and 12.65% respectively. Bitcoin is down 8.73% to trade $32,900.