Cryptocurrency markets continued to experience a sellout on May 20, triggered by a combination of negative news including China’s latest regulations.
According to CoinMarketCap, a market data tracker, some 900 trillion won ($794 billion) worth of cryptocurrency was lost within less than 24 hours as of May 19 night. That is twice as much as Samsung Electronics’ market capitalisation, which stood at 474 trillion won on May 20.
The price of a bitcoin was around 51 million won on May 20 afternoon, having fallen 30 per cent from 71.74 million won on May 7. Ethereum plunged 20.33 per cent on May 19, selling for about 3.33 million won on May 20 afternoon.
Analysts attributed the market crash to a combination of several factors, including China’s crackdown, Elon Musk’s tweets and inflation concerns.
On May 19, Chinese financial regulators said they had banned financial institutions and payment companies from providing cryptocurrency services.
“The concern over a rapid rise in inflation in the US that might result in tapering and excessive fandom of Elon Musk contributed to extreme volatility,” HI Investment & Securities analyst Park Sang-hyun said. Tesla last week suspended a plan to accept Bitcoin payments for its cars, triggering a fall last week.
Investors and experts are divided over whether Bitcoin and other cryptocurrencies have hit rock bottom.
Ark Investment Management CEO and CIO Cathie Wood on May 19 told Bloomberg TV that the value of Bitcoin would still rise to $500,000, adding that the digital coin is “on sale”.
But Kim Ki-sik, the head of the Korea Institute for the Future, urged investors to remain extremely cautious.
“I can tell you with 100 per cent certainty that there will be more plunges, even bigger ones,” Kim, who briefly served as head of the Financial Supervisory Service in 2018, said during a KBS radio show on May 20.
“As the influence of cryptocurrencies rises, financial regulators across the world will feel the need to have a tight grip on the digital assets. This alone can drive a selloff.”
Kim warned that those who jump into the market thinking that digital coins are affordable now might end up losing a lot of money.
THE KOREA HERALD/ASIA NEWS NETWORK