THE cryptocurrency market has crashed again, proving the volatile nature of coins like Bitcoin, Dogecoin and Etherum.
The price of Bitcoin, the biggest cryptocurrency on the market, is down almost 4% over the past 24 hours and almost 9% in the last week.
It is currently around $31,925, according to Coinmarketcap, and has more than halved in value since it reached $64,000 in April.
The second biggest cryptocurrency, Etheruem, has also dropped in value in the last 24 hours along with other popular coins like Dogecoin, Cardano and XRP.
It comes after a series of worldwide crackdowns on the cryptocurrency market.
The Met Police seized nearly £180million in the largest-ever cryptocurrency raid in the UK last week.
The money was discovered as part of a major probe into money laundering.
The world’s biggest cryptocurrency exchange, Binance, was also banned from operating in the UK by the country’s financial watchdog last month.
5 risks of crypto investments
THE Financial Conduct Authority (FCA) has warned people about the risks of investing in cryptocurrencies.
- Consumer protection: Some investments advertising high returns based on cryptoassets may not be subject to regulation beyond anti-money laundering requirements.
- Price volatility: Significant price volatility in cryptoassets, combined with the inherent difficulties of valuing cryptoassets reliably, places consumers at a high risk of losses.
- Product complexity: The complexity of some products and services relating to cryptoassets can make it hard for consumers to understand the risks. There is no guarantee that cryptoassets can be converted back into cash. Converting a cryptoasset back to cash depends on demand and supply existing in the market.
- Charges and fees: Consumers should consider the impact of fees and charges on their investment which may be more than those for regulated investment products.
- Marketing materials: Firms may overstate the returns of products or understate the risks involved.
While Brits can still buy and trade coins on the platform, it means Binance is no longer allowed to "undertake any regulated activity" in the UK.
China is also getting tough on cryptocurrency mining – the energy intensive method of creating new coins.
A number of authorities across the country have ordered crypto-mining projects to close – including the Sichuan province.
It came as part of a series of hammer blows to a number of coins.
Iran has banned the mining of cryptocurrencies including Bitcoin for nearly four months because the country faces major blackouts and mining uses lots of power.
Meanwhile, poster adverts for cryptocurrency platform Luno have been banned for failing to mention the risk of Bitcoin investments.
This extreme volatility and the accompanying sudden market falls are just one of the reasons that investing in cryptocurrency is a very risky business.
You can be left with less money than you put in, and the markets can shift in the blink of an eye.
What is Bitcoin?
BITCOIN got you baffled? Here’s what you need to know:
- Bitcoin is a virtual currency
- It's traded between people without the help of a bank
- Every transaction is recorded in a public ledger, or "blockchain"
- Bitcoin is created by mining
- Mining involves solving difficult maths problems using computer processors
- Bitcoin can be traded anonymously, which can make it a popular way of funding illegal activities
- The value of Bitcoin fluctuates wildly
- Bitcoin is one of many different cryptocurrencies, but by far the most popular
You might not be able to access your investment if platforms go down and you could be left unable to convert crypto into cash.
There have also been warnings around scams related to cryptocurrencies, with people losing vast sums of money.
You should never invest in something you don’t understand and you should never put in money that you can't afford to lose entirely.
Which cryptocurrency prices are down?
Bitcoin, the most popular cryptocurrency, is currently trading at $31,925 at the time of writing – down almost 4% since yesterday according to Coinmarketcap.
Other cryptocurrencies, such as Ethereum and Dogecoin, have also crashed.
Ethereum, the second-largest cryptocurrency, is down by about 6.5% over the past 24 hours at $1,898.76, while Dogecoin is down 5.5% at $0.1935.
Dogecoin's rival, Shiba Inu, is also down 8% at $0.000006853.
Why are crypto markets down?
Cryptocurrencies have suffered a series of blows recently, after a number of regulators and authorities have started to clamp down on the market.
The Met’s Economic Crime Command received intelligence about the transfer of criminal assets before seizing £180million.
It is the biggest amount of the cryptocurrency seized in the UK and one of the largest in the world.
The seizure tops the previous record made just weeks ago after police seized £114million.
Binance has also been banned in the UK, signalling a major "red flag" to investors, Hargreaves Lansdown senior investment and markets analyst Susannah Streeter previously told The Sun.
Following the ban, Brits have been having trouble withdrawing and depositing money into their Binance accounts, according to reports from the Financial Times.
The UK isn't the only one getting tough on crypto.
Many crypto-mining regions in China are radically reducing operations.
Miners create new cryptocurrencies using a complex computer code in a complex process, which is highly energy intensive and requires a lot of computer power.
Authorities in the China's southwest province of Sichuan ordered crypto-mining projects to close last month.
It followed on from Beijing declared war on Bitcoin mining and trading as part of a series of measures to control financial risks.
The first signs of trouble for the crypto market came last month, when Elon Musk released a statement saying Tesla would no longer be accepting Bitcoin for purchasing vehicles.
The Tesla CEO has previously caused currencies to spike in value by mentioning them on Twitter or in press statements.
Posting to his personal Twitter account, he wrote: "We are concerned about rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel."
Within minutes Bitcoin started plummeting. Other cryptocurrencies quickly followed, with several of the mainstream coins seeing a huge drop in value.
Coins took another big blow in April when Turkey's central bank banned the use of cryptocurrencies for purchases.
From Dogecoin and Litecoin to Bitcoin – here are the different cryptocurrencies explained.
Mastercard will allow payments in cryptocurrencies like Bitcoin later this year.
Meanwhile, Rishi Sunak is setting up a taskforce to explore the option of launching a UK digital currency dubbed "Britcoin".
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