Price of bitcoin drops amid cryptocurrencies worst month in nearly 10 years

The price of bitcoin has dropped again amid its worst month in nearly a decade, so will spooked investors stay away for good?

The price of bitcoin has dropped again amid cryptocurrencies worst month in nearly a decade, sparked by a series of bad news stories which sent it on a spiral.

Bitcoin’s current value is sitting at $US36,459 ($47,279), a rather staggering drop from its all-time high of $US65,000 ($84,291) in April. At one point last week bitcoin almost fell below $US30,000 for the first time since January before rebounding slightly in recent days.

The uncertainty has been fuelled by China’s warning of a crackdown on cryptocurrency use and mining, along with tweets by tycoon Elon Musk who announced Tesla would no longer accept bitcoin as payment over environmental concerns.

Despite Musk later softening his stance by agreeing to meet with the heads of American bitcoin miners, its value has been slashed by more than a third this month, the most bleak monthly performance for the cryptocurrency since September 2011.

RELATED: Giant bitcoin ‘mine’ uncovered

Spoke with North American Bitcoin miners. They committed to publish current & planned renewable usage & to ask miners WW to do so. Potentially promising.

— Elon Musk (@elonmusk) May 24, 2021

A bitcoin mining data centre is seen on an oilfield in North Texas. Picture: AFP

So will investors of the world’s biggest currency stay away for good? That’s the question on everyone’s lips.

“It is really easy to be a crypto investor. It’s extremely difficult to be a crypto trader,” Peter Smith, CEO of Blockchain.com, a crypto research, investing and lending start-up, told CNN. “It is a very high volatility market and it can crush you easily.”

Why are there environmental concerns?

Bitcoin mining is the process by which new bitcoins are entered into circulation and involves computers solving complex but useless mathematical problems. This process consumes considerable amounts of electricity.

Bitcoin mining uses the same amount of energy annually as the Netherlands did in 2019, according to data from the University of Cambridge and the International Energy Agency.

Miners in China account for about 71 per cent of bitcoin mining energy consumption, with miners in the US and Russia responsible for about 7 per cent each.

However, bitcoin mining may not have the devastating environmental impact that some people claim.

Nearing the end of another week with a #bearish$BTC#Bitcoin more correction is coming. I may not have gotten my $27K #BTC order filled last week, but there is always another shot this week. Maybe even lower! If this downward trend isn't stopped, 20K-25K is possible. pic.twitter.com/FFNKPjc5xN

— Dr. Jones, Cryptologist, DDNFT (@CryptoTautology) May 29, 2021

‘Crack down’

China’s powerful State Council issued a statement on May 21, saying more regulation was needed to protect China’s financial system from crypto trading and mining.

The State Council said it was necessary to “crack down on bitcoin mining and trading behaviour, and resolutely prevent the transmission of individual risks to the social field”.

“We should be more alert and look for potential risks.”

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Tesla CEO Elon Musk said the company will no longer accept bitcoin as payment.

Not all bad news

Amid the doom and gloom, some in the crypto community feel this price correction is a good thing, that the rebalancing is much-needed for the market to increase over the long term.

“The large falls in valuations seen this week are, in one way, healthy as they enable the market to clear excess speculative positions and consolidate before its next phase of expansion,” Anatoly Crachilov, the chief executive of investment manager Nickel Digital, told Forbes.

– With AFP

Originally published as Price of bitcoin drops amid cryptocurrencies worst month in nearly 10 years