ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailPositive ArrowIcon PrintIcon Twitter
Cryptocurrencies

Bitcoin stumbles below $30,000 under weight of China crackdown

'Downward pressure overwhelmed' digital currency's support, trader says

Bitcoin has drawn renewed scrutiny from Chinese monetary authorities, and its volatility has also put it on U.S. lawmakers' radar for regulation.   © Reuters

WASHINGTON -- While Asia slept, regulatory pressures in China continued to bear on bitcoin, dragging the price of the world's most traded cryptocurrency below $30,000 for the first time since January.

Bitcoin's price fell to just above $29,000 on Tuesday morning before stabilizing above $32,000 later in the day.

The digital currency is down more than 50% compared with an all-time high of nearly $65,000 reached in mid-April, according to Coindesk.

"Globally we are seeing a much more forceful crackdown on crypto by governments," analysts at QCP Capital, a Singapore-based crypto trading firm, wrote in a note. "China is now leading the charge, and this directive coming all the way from the top means it will continue reverberating throughout the lower levels for a few more weeks to come."

The People's Bank of China on Monday told the country's largest financial institutions, including its three biggest state-owned banks and electronic payment provider Alipay, to crack down on cryptocurrency trading, setting off bitcoin's slide. Chinese authorities last week also closed energy-hungry 26 bitcoin mining operations in hydropower-rich Sichuan Province.

"With continued anxiety from Chinese regulatory action and a looming futures and options expiration at the end of the week this week, the downward pressure overwhelmed support late last night and early this morning," said Chad Steinglass, head of trading at CrossTower, a crypto capital markets firm.

"Economic data coming out of China has been consistently coming in below expectations. This has created a sustained backdrop of risk aversion, and investors have been liquidating all types of assets," Steinglass added.

The digital currency's quick price movements have made it a favorite for speculative trades. But the flip side of this is high volatility, with the price dropping by more than 10% in some recent trading days, wearing down investors' ability to hold.

Bitcoin's performance Tuesday stood in contrast to a rally in U.S. stocks, with the Dow Jones Industrial Average rising 0.2%. The broader S&P 500 advanced 0.51%, while the tech-heavy Nasdaq gained 0.79% to hit an all-time closing high of 14,253.27.

"The rebound during the U.S. trading day today was encouraging and leads credence to the idea that 30K has strong support," Steinglass said.

But others are less certain about the outlook.

"A lot of crypto happens in Asia, a lot of it is Chinese focused," Mike Novogratz, CEO of digital assets group Galaxy Digital Holdings, told CNBC's Squawk Box on Tuesday. "So we're seeing big liquidations, so it's hard to call a bottom."

While moving more slowly than China's top-down approach, U.S. authorities are also taking a closer look at cryptocurrencies. Securities and Exchange Commission chair Gary Gensler, called last month for "greater investor protections" in the crypto market.

Democrats in Congress are also looking to form working groups on crypto regulation led by House Financial Services Committee chair Maxine Waters and Sen. Elizabeth Warren, who earlier this month called the industry a "Wild West."

Additional reporting by Tatsuya Goto in New York

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this monthThis is your last free article this month

Stay ahead with our exclusives on Asia;
the most dynamic market in the world.

Stay ahead with our exclusives on Asia

Get trusted insights from experts within Asia itself.

Get trusted insights from experts
within Asia itself.

Try 1 month for $0.99

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this month

This is your last free article this month

Stay ahead with our exclusives on Asia; the most
dynamic market in the world
.

Get trusted insights from experts
within Asia itself.

Try 3 months for $9

Offer ends October 31st

Your trial period has expired

You need a subscription to...

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers and subscribe

Your full access to Nikkei Asia has expired

You need a subscription to:

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers
NAR on print phone, device, and tablet media

Nikkei Asian Review, now known as Nikkei Asia, will be the voice of the Asian Century.

Celebrate our next chapter
Free access for everyone - Sep. 30

Find out more