The Week Crypto Crashed — Market Drops $700 Billion After Chinese Crackdown And Elon Musk’s Environmental Worries

The Week Crypto Crashed — Market Drops $700 Billion After Chinese Crackdown And Elon Musk’s Environmental Worries

Topline

The cryptocurrency market shrunk by around 27% this week after Tesla billionaire Elon Musk raised concerns over bitcoin’s environmental impact and China renewed its regulatory crackdown on digital assets, sending leading crypto tokens into double-digit tailspins and erasing almost $700 billion in value. 

Key Facts

The value of several major cryptocurrencies plunged by double digit percentages since May 12, the day Musk tweeted Tesla’s decision to no longer accept bitcoin due to its heavy environmental impact. 

Bitcoin and ethereum both fell by around 30% but managed to retain their positions as the two most valuable cryptocurrencies by virtue of their immense size, with Binance’s BNB perilously close to losing third place after a fall of almost 40%. 

Popular meme currency dogecoin fell by around 20% to become the seventh most valuable token, though it managed to mount a temporary comeback on the days between Musk’s tweet and China’s crackdown.   

Assets like Cardano’s ada actually soared to become the fourth most valuable token amid the market’s wider dip as people sought environmentally friendly alternatives to bitcoin, though its value dropped nearly 30% in the day following China’s regulatory announcement.      

Big Number

$36,360. That’s the value of bitcoin as of Wednesday morning, marking its lowest level since early February. It’s a dramatic fall from a month ago, when the token surged to an all-time high of $63,000.

Key Background

The week’s crypto sell off was precipitated by Musk announcing that Tesla wouldn’t accept bitcoin and worsened when Chinese officials said they would be cracking down on financial institutions using the digital assets. Though the Chinese guidelines are not new, officials said they were doubling down owing to the crypto market’s volatility, which makes it “extremely easy” to manipulate and has them questioning the value of digital tokens. Musk himself has been repeatedly accused of manipulating these markets and while he has warned people to “invest with caution,” some of the biggest spikes for dogecoin or bitcoin have come after he mentioned them. 

Further Reading

China Cracks Down On Crypto Business, Saying ‘Speculative’ Trading ‘Seriously Infringing’ On Financial Order (Forbes)

Bitcoin Bounces Back From Three Month Low As Elon Musk Denies Tesla Has Sold Its Crypto Assets (Forbes)

Tesla Will Stop Accepting Bitcoin As Payment Due To Environmental Worries, Musk Says (Forbes)

Elon Musk Warns People To ‘Invest With Caution’ As Dogecoin Rallies Ahead Of His SNL Appearance (Forbes)

Cardano Surges During $300 Billion Crypto Crash As Musk Eyes Sustainable Bitcoin Alternatives (Forbes)

Dogecoin Stages A Comeback Amid Crypto’s $300 Billion Crash, Soaring 30% As Elon Musk And Coinbase Signal Confidence (Forbes)


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