The cryptocurrency market’s huge crash escalated Sunday as a slew of Chinese crackdown measures continued to rattle consumer sentiment, driving declines to more than $1.3 trillion after a market record on May 12, the day billionaire Elon Musk revealed on Twitter that Tesla will no longer invest in or sell bitcoin due to its high environmental expense.
In response to recent alerts from Chinese regulators, cryptocurrency exchange Huboi informed CoinDesk on Sunday that it has discontinued its miner-hosting services in mainland China. It’s unclear how much this would affect mining, but cryptocurrency prices briefly collapsed in April after blackouts in the country caused large drops in bitcoin mining speeds. The organization, which is one of the world’s largest crypto-exchanges by value, has announced that it would stop offering some investment products to new customers in a number of other countries “due to recent dynamic changes in the industry” and “to protect the interests of investors.”
Despite the collapse, Ark Investment CEO Cathie Wood predicts bitcoin values would climb to $500,000 (a whopping 15 times current prices of $33,350), despite the fact that uncertainty in the cryptocurrency sector is to be anticipated. “We go through soul-searching moments like this and scratch the templates, and yeah, our conviction is just as strong,” she said on Bloomberg TV on Wednesday, before cautioning, “You never know how low is low when a demand gets really emotional.”
Regulatory problems have previously rattled the emerging crypto industry. Despite more than doubling in value in 2017, the aggregate value of the world’s cryptocurrencies plummeted by more than 80% within months after countries such as South Korea began cracking down on then-booming initial coin offerings, which minted new tokens and fuelled an investor frenzy similar to the recent surge in largely unknown altcoins.
It wasn’t until the pandemic that inflationary fears and increased institutional penetration propelled the market to new lows late last year. The stock is already up roughly 50% from its early-2018 low, but the future remains very unclear. Some analysts say the economy has matured enough to recoup its gains, but others caution that a steeper correction is still possible.