Bitcoin and other digital coins plunged on Friday wiping over $260 billion off the value of the cryptocurrency market.
At around 14:06 p.m. Beijing time, bitcoin was down nearly 10% in the last 24 hours at $49,281.40, according to CoinDesk data. Ethereum fell to $2,202.05, down more than 11%. XRP, the fifth-biggest cryptocurrency plunged over 22%, according to price tracking site CoinMarketCap.
This wiped out around $260 billion of value from the entire cryptocurrency market.
It was unclear what triggered the sell-off though cryptocurrencies are known for their wild price swings.
“The market has run up quite a bit overall, and it’s probably cooling off before the next leg up,” Vijay Ayyar, head of business development at cryptocurrency exchange Luno, told CNBC by email.
On Thursday, U.S. stock indexes fell after reports that President Joe Biden is considering a hike in the capital gains tax.
“There has also been a wider stock market dip, which might be affecting all risk-on assets,” Ayyar added.
This year alone, bitcoin has risen 71% and ethereum has rallied 200%.
Part of that support has been because of increased buying of bitcoin by institutional investors. And companies such as Tesla and Square have bought billions of dollars worth of bitcoin too.
Banks are also trying to allow their clients to get involved in the bitcoin market. In March, Morgan Stanley said it was launching access to three funds that enable ownership of bitcoin, CNBC reported.
However, concerns over a regulatory crackdown on bitcoin continue to cloud the market. Jesse Powell, CEO of a major cryptocurrency exchange called Kraken, warned governments could clamp down on the use of bitcoin and other cryptocurrencies.
India is planning to introduce a law to ban the trading or even ownership of cryptocurrencies, Reuters reported last month. In February, U.S. Treasury Secretary Janet Yellen called bitcoin a “highly speculative asset” and said she was worried about potential losses for investors.
Authorities around the world are looking into how to regulate bitcoin. The Deputy Governor of the People’s Bank of China, called bitcoin an “investment alternative” last week, which marked a more progressive tone on cryptocurrencies after a fierce crackdown by the country’s regulators on the industry in 2017 and 2018.