Wall Street investors shy away from cryptocurrencies as markets tumble
Cryptocurrencies were not a safe harbor for investors on Thursday as U.S. markets plunged, along with the biggest cryptos.
Bitcoin was down 6% as of 10:30 a.m. ET Thursday, closing in once again on the $30,000 threshold. Ethereum and Dogecoin, meanwhile, both fell about 10%, according to CoinDesk. The tumbles come after a period of relative stability for crypto markets.
The reason for the tumble seems to be the same as the sell-off in U.S. and global markets. Investors are growing increasingly wary of inflation and a slowdown in the economic recovery from the COVID-19 pandemic. Crypto traders also saw Elizabeth Warren’s description of crypto markets as “highly opaque and volatile” in a note to Securities and Exchange Commission chairman Gary Gensler as a possible shot across the bow.
In that same letter, Warren set a July 28 deadline for the SEC to figure out the issue of crypto regulation.
“As the cryptocurrency markets continue to grow and expand, the lack of regulation to provide basic investor protections is unsustainable,” she wrote.
Bitcoin has been facing pressure in recent weeks as China has stepped up recent efforts to ban crypto sales. Two months ago, China banned financial institutions and payment companies from providing crypto services. And earlier this week, the central bank demanded the shutdown of a company “suspected of providing software services for virtual currency transactions.”
The central bank has also voiced concerns about stablecoins, such as Tether.
The Chinese volatility combined with the economic uncertainty has sent many investors into more stable vehicles, such as treasury bonds.
Bitcoin has seen its value cut in half over the past three months, falling precipitously from its high of $64,829. Ethereum is more than 50% off its highs in that same time period. Dogecoin has largely collapsed, losing 72% of its value since mid-May. And other cryptos have fallen as much as 90% in value this year.
Subscribe to Fortune Daily to get essential business stories straight to your inbox each morning.