Bitcoin falls by 30% after China Warning, Musk Comments

Bitcoin plunged almost 30% to $31,000, wiping out more than $500 billion in value from the coin’s peak market value.
Bitcoin cryptocurrency

The crypto bubble that inflated Bitcoin’s value past $1 trillion and added billions to nonsense digital tokens overnight is bursting.

Bitcoin plunged almost 30% to $31,000, wiping out more than $500 billion in value from the coin’s peak market value. It has erased all the gains it clocked up following Tesla Inc.’s Feb. 8 announcement that it would use corporate cash to buy the asset and accept it as a form of payment for its vehicles. Ethereum, the second-biggest coin, sank more tha 40%, while joke token Dogecoin lost 45%.

Bitcoin is now down more than 50% from its record of almost $65,000 set in April. Fueling the volatility is Tesla CEO Elon Musk, whose social-media utterances have whipsawed the crypto community. A statement from the People’s Bank of China on Tuesday reiterating that digital tokens can’t be used as a form of payment added to the selloff.

The selloff dominated market chatter on a day when equities also were tumbling and the Federal Reserve was set to release minutes from its latest meeting. Critics had warned for weeks that the moves in crypto assets were unsustainable and that any sign of a selloff would lead to a rout.

Chart-watchers pointed to key technical levels that have failed.

“From a technical standpoint, the indicators are flashing red,” said Ipek Ozkardeskaya, senior analyst at Swissquote in Gland, Switzerland. “The next important support level stands near $37,000, then the $30,000 mark. There is a chance that we see a pullback to these levels and even below, at least in the short run.”

Cryptocurrency-linked stocks also dropped, with Coinbase Global Inc. falling 5.2% in US premarket trading and Marathon Digital Holdings Inc. slumping 12%.

Then there’s Musk.

With his often cryptic Twitter posts moving millions, the Tesla chief has become a Svengali-like character in the world of crypto. Bitcoin embarked on a multi-month rally following Tesla’s February announcement, soaring to its $64,870 peak, in large part due to the company’s embrace.

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