Why Crypto Down Right Now? 7 things to know about the crypto crash today
The big question many investors are asking today is: why is crypto down today?
This is a reasonable question. After all, cryptocurrencies have only been on the rise in recent years. (Well, there have been a few catastrophic crashes along the way, but the overall trendline is impressive).
Now, these digital currencies are very volatile assets to hold. Most investors are aware of this. But given that cryptocurrencies have seen very few days of downtime, any sort of drop is quite surprising at this point.
In fact, there are several reasons why crypto has underperformed in recent days. Today, some headwinds are taken into account to a greater extent. Let’s see what these headwinds are and what investors need to know.
Why Crypto Down Today?
One of the biggest fears of crypto investors is that their decentralized assets could become regulated. Indeed, China recently announced its intention to do just that.
- China recently banned financial institutions from providing crypto-related services. As InvestorPlace Associate news editor Brenden Rearick explained that this ban only applies to financial institutions. Individuals can still invest in crypto, but trading these digital currencies can be a bit trickier as a result of this legislation.
- Given the timeliness of this evolving story, I think we’ll see more details popping up in the coming days. However, as we have seen in previous situations, when the ability to trade specific assets is limited, investors tend to want to withdraw from the trade they are in. And given the size and importance of China on the global cryptocurrency system, this movement has been magnified.
- Yesterday’s incredible sawing of crypto prices reflects how volatile these assets can be in such an environment.
- With China recently backing its initial move, it appears investors are currently assessing increased selling pressure.
- In addition, the US Treasury Department yesterday announced a proposal unfavorable to crypto investors. This proposal requires that business-related crypto transactions over $ 10,000 be reported to the IRS. The US Treasury recently cracked down on cryptocurrencies. This is yet another move that crypto investors see as a regulatory burden.
- Investors should also note that Hong Kong has shared its intention to ban retail investors from engaging in crypto trading.
- As a result, the downward movement of 7% Bitcoin (CCC:BTC-USD) is perhaps not that surprising to investors.
As of the publication date, Chris MacDonald does not have (directly or indirectly) any position in any of the stocks mentioned in this article. The opinions expressed in this article are those of the writer, subject to InvestorPlace.com Publication guidelines.
InvestorPlace Media print article, https://investorplace.com/2021/05/why-is-crypto-down-right-now-7-things-to-know-about-the-crypto-crash-today/.
© 2021 InvestorPlace Media, LLC