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Cryptocurrencies bounce back from Sunday sell-off, bitcoin still down 30% in May

Published 05/24/2021, 02:22 AM
Updated 05/24/2021, 04:32 PM
© Reuters. FILE PHOTO: Representations of the virtual currency Bitcoin stand on a motherboard in this picture illustration taken May 20, 2021. REUTERS/Dado Ruvic/Illustration

© Reuters. FILE PHOTO: Representations of the virtual currency Bitcoin stand on a motherboard in this picture illustration taken May 20, 2021. REUTERS/Dado Ruvic/Illustration

By Tom Wilson, Tom Westbrook and Stephen Culp

NEW YORK (Reuters) -Bitcoin jumped more than 10% during a surge in cryptocurrencies Monday, regaining some ground lost during a weekend sell-off that was sparked by renewed signs of a Chinese crackdown on the emerging sector.

Bitcoin, the world's largest cryptocurrency, was last up 12% at approximately $39,400, erasing losses of 7.5% from a day earlier but still down by more than 40% from last month's record high.

Second-largest cryptocurrency ether jumped nearly 19% to $2,491 after slumping more than 8% on Sunday to near a two-month low. It too has fallen by almost half from a peak hit earlier this month.

Bitcoin added to its gains late on Monday following tweets from billionaire Elon Musk that appeared to soften his stance against the environmental impact of the cryptocurrency. Musk said on May 12 that Tesla (NASDAQ:TSLA) will no longer accept bitcoin due to its consumption of fossil fuels during the mining process.

"Spoke with North American Bitcoin miners. They committed to publish current & planned renewable usage & to ask miners WW to do so. Potentially promising," Musk wrote.

In the past week policymakers have stepped up their response to the popularity - and volatility - of cryptocurrencies. On Monday, Federal Reserve Governor Lael Brainard told a virtual conference organized by CoinDesk that the growth in "private money," digital payments and steps by other central banks were sharpening the focus on Central Bank Digital Currencies, or CBDC.

While her comments did not cause much of a price move, she did say that the wide use of private money poses consumer and stability risks given possible "run-like behavior."

Her comments were echoed later in the day by Atlanta Fed President Raphael Bostic.

"It is moving fast. The crypto space in particular right now if you characterized it – it is an extremely volatile market and I don’t think its characteristics right now are conducive for them to be currency," he said.

But Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago, said: "What we're seeing is an evolution from being an outlaw currency to something that could become potentially more mainstream. In order for it to become mainstream, there’s going to have to be rules and regulations around that," he said, "and that is what is creating the short-term volatility in all of the cryptocurrencies."

Bitcoin is up approximately 35% this year but down nearly 40% from the year's high of $64,895.22 on April 14.

Billionaire investor Ray Dalio on Monday announced that he is holding bitcoin at Coindesk's annual Consensus conference.

The Bridgewater Associates founder did not give further details but said that in an environment where government debt is at historic levels and competition from China is increasing, the U.S. dollar is under pressure and diversification is important.

He added that “bitcoin’s greatest risk is its success,” because as more people choose to put their savings into the digital currency, it becomes more of a threat to the traditional monetary system.

“Personally I’d rather have bitcoin than a bond,” he said in the pre-recorded interview from May 6.

SUNDAY SLUMP

The catalyst for Sunday's slump was cryptocurrency "miners" - who mint cryptocurrencies by using powerful computers to solve complex math puzzles - halting Chinese operations in the face of increasing scrutiny from authorities.

The attention on miners in China - who account for some 70% of supply - is the latest front in a wider push by Beijing against the cryptocurrency sector.

Major cryptocurrency exchange Huobi on Monday suspended both crypto-mining and some trading services to new clients from mainland China, adding that it would instead focus on overseas businesses. Others also suspended business in China.

In the short-term, market players said, that is likely to lead to pressure on prices as miners sell bitcoin held on their balance sheets.

Crypto market players said fears over the China crackdown would likely linger.

"Nobody's really sure about what happens next," said Joseph Edwards, head of research at crypto brokerage Enigma Securities. "Crypto clearly finds itself in a tough spot in terms of the narrative right now, and it's taken a lot of oxygen out of the room."

Bitcoin had stabilized from a bruising week on Saturday after Tesla boss Musk - whose comments on cryptocurrencies have been a key price driver in recent months - tweeted support for crypto in "the true battle" with fiat currencies.

Yet after last week's 25% drop, triggered in part by toughening language from Chinese regulators, bitcoin remains more than 40% below last month's record high of $64,895.

© Reuters. FILE PHOTO: Representations of the virtual currency Bitcoin stand on a motherboard in this picture illustration taken May 20, 2021. REUTERS/Dado Ruvic/Illustration

"It is too early to call the end of the recent bitcoin downtrend," J.P. Morgan analysts wrote.

Publicly listed bitcoin funds saw outflows of more than $530 million last week, their fifth straight week of loses, they said, in a sign of retrenchment by institutional investors.

Latest comments

are you sure
shiba inu oeoeoeoe shiba shiba shiba love shiba
You frightened the people by decreasing price and forced people to sell their crypto. it's look like thefthing their money....
hi gak
hi
Something to with China ?
the Chinese and Musk can do and say what they like - the rise of crypto is unstoppable - this is clear to anyone who actually has bothered to take the time to understand their vast benefits and the future potential of blockchain technology - I absolutely don't care that half my crypto wealth has disappeared in the last two weeks - over the past five years I'm still up 1000s of percent and the market will bounce back incredibly quickly. I'm pleased Chinese miners will have to move - too much bad electricity from coal powered generation - many parts of the world are using the cheapest form of electricity for mining and other crypto activity and that cheapest electricity is of course from renewable energy and renewables are taking market share from fossil fuel based energy at an ever increasing rate.
....of course my horse...
😘😘😘
next article will biticoin lossed after the hard fight. remember the central bank keep telling you central bank coin will come to destroy the Crypto and are succesful what the history tell you never fight the fed . fed will make biticoin value zero soon but this time it up against american fool . so American central bank will destroy the amercian wealth I like that
So is not advisable to put more money
there are over 200 countries in the world that can host servers to carry out crypto - central banks would have to literally close down the internet to prevent crypto from thriving. That would be shooting themselves in the foot somewhat!
who are giving true bitcoins for fiat $$$??? elon, is that you?
No central authority declared BTC as money, therefore it’s not fiat.
Not really fiat...more like ponziat
banking systems are constantly evolving/updated, not really archaic; it's not like nothing has changed in online banking since its inception. Most banks don't tale a cut of anything for most people, unless you are talking about loans....by the way; if there are no banks how will people get loans for homes, cars, etc.? I'm not saying I particularly like banks, but a lot of what you are saying doesn't make sense.
Good signs i’m on it jusy bought for 10000& k
I meed someone to put me through, veronica is my name
your life coins today
Nice! Keep on up!
Lower lows lower highs... it's going to the basement...
nope - bouncing back well within the next two months - if you can be that patient and dollar cost average buying the dips now, you'll make a mint.
Market follows coins...What a pity
Here we go.  . Sell when others are greedy.
I'm buying whilst others are fearful now lol
Musk is a market manipulator... he mislead the sheep folllowing him for his own gains... and now he is surprised they turn their back on him... Crypto's have zero value, it' a scam. That is the simple truth.
you couldn't be more wrong - that's like saying in 1998, Google has no profit potential - once you understand the vast benefits of blockchain technology, you'll realise there is huge profit potential in so many crypto projects - you've clearly not done your research. But it's those kind of comments of ignorance that keep many people from bothering to invest, whilst folk like me, who've been investing for over five years have become millionaires - and continue to sell the peaks and buy the troughs - follow a few simple rules and it's a huge and easy way of making vast amounts of money and investing in the Internet 2.0
proof or ban....oh wait, this isn't reddit, lol
If mining gets stopped(supply) then demand might skyrockets. Watch the space
If the Chinese government prohibits miners, it means great opportunities for miners from other countries, the less rivals, the greater profit and low hashrate
i mine BTC at a price of $ 600-900 long time ago , now i'm confused when starting trading, at what price should i put a stop loss ?
It is written that a wise man should not cross the ocean on a boat that leaks 50% in two weeks.
who are selling true money for fiat dollars?
 it's not that difficult if you follow a few simple rules - don't invest more than you're happy to lose. buy a selection of well researched cryptos that clearly have benefit cases and that have great backing by serious organisations and have a great team of world class programmers and mathematicians - like Cardano to name one really obvious one - buy when everyone has sold and at the usual big crypto winters and dips; take profits at frothy tops - that's it - don't chase the prices up and buy when there's been a massive surge in prices - stick to those rules and like me, you'll make an absolute fortune on crypto.
True money? Nope, not me; not selling my gold and silver. I heard there is some newfangled mathematical money that is failing. People will save whatever fraction of their investment that they can and some of that money will flow into gold and silver.
when the music stops and the party ends, btc will be worth less than 5k, gold at 10k, and silver at 150+.....and the dollar will be nearing toilet paper territory. Whatever you do, don't hold on to USD.
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