Bitcoin and ether tumbled on Wednesday (May 19) to 3-1/2 month lows, on track to post their largest one-day loss since March last year, in the wake of China’s move a day ago to ban financial and payment institutions from providing cryptocurrency services.
At one point during the meltdown, nearly $1 trillion was wiped off the cryptocurrency’s market capitalization.
In late morning trading, the market cap was at $1.65 trillion, according to data tracker CoinGecko.com
Bitcoin, the biggest and best-known cryptocurrency, had already been under pressure from a series of tweets from Tesla boss Elon Musk, but the news from China sent it further down, it hit a 3-1/2-month low of $30,066.
The cryptocurrency has dropped 54% from a record high of $64,895 hit on April 14. It is also heading for its first monthly decline since November 2018.
Bitcoin’s decline whacked other crypto assets, with Ether, the coin linked to the ethereum blockchain network, dropping to $1,850, its weakest level since late January. It was last down 26% at $2,497. Since hitting a record high on May 12, ether has plummeted 57%.
Meme-based dogecoin also tumbled – losing nearly 26% to $0.35, according to Coingecko.
Shares in the crypto exchange Coinbase dropped 7.4% on Wednesday. Coinbase’s share price has nearly halved from the peak hit on the day of its direct listing in April.
Tesla Inc. also fell, down 3.8% at $555.83.
Cryptocurrency price declines last week were sparked by Musk’s reversal on Tesla accepting bitcoin as payment. His subsequent tweets caused further confusion over whether the carmaker had shed its holdings of the coin.
China’s announcement on Tuesday banning financial institutions and payment companies from providing services related to cryptocurrency transactions exacerbated selling. China also warned investors against speculative crypto trading.
Some cryptowatchers, however, predicted more losses ahead, noting the fall below $40,000 represented a breach of a key technical barrier that could trigger more selling.
(Production: Paul Warren, Avivit Delgoshen)