Bitcoin recovery stalled near the $40K due to growing number of calls, especially from US officials, to regulate cryptocurrency market after BTC and major altcoins dropped more than 30% on a single day this week.
After brief attempts to break through $42K on Friday, BTC returned to $40K foothold. Major altcoins felt weak as well taking clues from Bitcoin price swings.
US Federal Reserve Chairman Jerome Powell on Thursday heightened fears around future of cryptocurrencies, saying they pose a risk to financial stability and noting the need to tighten regulation.
Bitcoin, the most popular cryptocurrency, experienced a sharp drop, plunging 30% on Wednesday after China announced new restrictions on the sector and Elon Musk’s Tesla said that it won’t accept Bitcoin as a means of payment for Tesla cars citing environmental concerns.
For assets such as cryptocurrencies and stocks, the main common denominator is ultra-soft credit conditions of central banks around the world, which, combined with hunt for yield drove up their value. However major central banks signal that will soon start to taper crisis monetary measures which will likely be a tough test for cryptocurrency market.
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