Ovunc Kutlu
19 April 2021•Update: 19 April 2021
ANKARA
Bitcoin and cryptocurrencies have been recovering on Monday from their largest decline seen since December, after investors are taking advantage of recent low prices.
After Bitcoin rose to a record level of $63,475 on Thursday, many cryptocurrencies such as Ethereum, Ripple and Dogecoin followed suit in following days to post all-time highs.
Price of Bitcoin, however, fell to as low as $50,500 on Sunday morning, losing 20% from its record level, while some other coins saw declines between 30%-40%.
The $50,500 mark became a support level on Sunday as many institutional investors, such as investment banks, took advantage of low prices and bought the dip to enter the market.
Some experts believe the sudden decline came after a major power blackout in northwestern China where a large amount of Bitcoin mining is located in the world. The outage led to the largest single day fall in mining hash rate since November 2017.
On the supply side, many of large investors who long held their Bitcoin on private wallets later transferred their assets to the market for a sell-off, which led to a domino effect causing panic, according to a group of other experts.
US Treasury Department was also rumored to bring charges against some unspecified financial institutions for using Bitcoin and cryptos for money laundering, according to some reports on social media on Sunday, which introduced a fear of crackdown on investors.
India and Turkey, where coin demand is high, have recently brought some regulations on crypto markets. This also created some uncertainty for investors amid the future of the $2 trillion crypto market.
Cryptocurrencies were criticized by US Federal Reserve Chair Jerome Powell last Wednesday who defined them as "vehicles for speculation" and added "They’re not really being actively used as payments."
Powell's comments came the same day when the US' largest crypto exchange Coinbase went public on Nasdaq with a reference price of $250 and climbed to $390 later that day, giving it a market valuation of more than $100 billion.
A positive note for the regulation front came with Massachusetts Institute of Technology (MIT) Crypto Professor Gary Gensler being confirmed the same day as the new chairman of the US' Securities and Exchange Commission (SEC).
Gensler who taught classes in digital currencies, blockchain and financial technology in MIT has been warmly welcomed by crypto investors, while the SEC is even expected to drop lawsuit or quickly settle for the case against Ripple.
In China, Central Bank Deputy Governor Li Bo said Sunday Bitcoin and crypto assets should be used as investment instruments and alternative investment methods. This is the first time China has acknowledged the cryptos' values after regulations in 2017 when it banned initial coin offerings (ICO) -- the fundraising process for new coins.
The recent positive news from China contributed to Bitcoin climbing back to $57,500 level at 0800 GMT on Monday with almost a 14% increase from its Sunday dip. Ethereum and Ripple were up by 5% and 12%, respectively, at the time.
With the rapid recovery, analysts now believe the sudden decline was a correction, rather than market entering bear territory, and coin prices have room to climb further if Bitcoin would cement $60,000 mark as a new support level.
