Bitcoin sinks below $30,000 amid broader market sell-off

Bitcoin sinks below $30,000 amid broader market sell-off

For bitcoin, a stronger dollar outlook means more people will likely prefer to hold the buck, said one analyst. Photo: AP

Bitcoin fell to a 6-month low on Tuesday, breaking a key support level of $30,000.

Cryptocurrencies were broadly under pressure on Tuesday morning amid a market sell-off. Analysts said a strengthening dollar and a global move to de-risk investments was hitting the asset class.

Bitcoin (BTC-USD) was down about 5.6% to trade at $29,834 (£21,832) on Tuesday morning in London. Ethereum (ETH-USD), the second biggest crypto by market cap, fell 6.9% to trade at $1,763.

Naeem Aslam, chief market analyst at Ava Trade, said $30,000 was a “key support level” for bitcoin and “a significant breach could result in a massive technical selloff.”

Read more: FTSE and European markets rebound after ‘freedom day’ selloff

“Having said that, crypto traders are well aware that the price action of cryptocurrencies is highly volatile, and the decline in prices should not come as a surprise given that similar price fluctuations have occurred in the past,” he added.

The slump coincided with a global stock market sell-off on Monday, sparked by fears about the spread of the Delta variant of COVID-19.

Bitcoin's plunged on Tuesday morning. Chart: Yahoo Finance UKBitcoin's plunged on Tuesday morning. Chart: Yahoo Finance UK

Bitcoin’s plunged on Tuesday morning. Chart: Yahoo Finance UK

A strengthening dollar hasn’t helped cryptocurrencies. 

“For bitcoin, a stronger dollar outlook, especially against a falling crypto market, means that more people will likely prefer to hold the buck, at least for the time being,” said Mati Greenspan, founder at Quantum Economics.

High levels of inflation may force the US Federal Reserve to raise rates soon, which has been pushing the dollar higher.

Cryptocurrency companies also continue to come under pressure from authorities around the world, casting a shadow over the sector. 

A cease and desist order was issued to US-based bitcoin financial services platform BlockFi by the New Jersey Office of the Attorney General and the Bureau of Securities, as reported by Forbes.

Elsewhere, US Treasury Secretary Janet Yellen said she wants financial watchdogs to act quickly on new rules to regulate stablecoins, which are cryptocurrencies pegged to other assets.

Meanwhile, recent reports suggest authorities in Malaysia steamrollered more than 1,000 bitcoin mining rigs as part of an investigation into “electricity theft”.

Watch: What are the risks of investing in cryptocurrency?

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