China Crypto Ban Triggers Crash, Wiping Out Almost $1 Trillion In Cryptocurrency Market Cap

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The cryptocurrency market crashed Wednesday, with the market cap losing nearly $1 trillion.

Popular cryptocurrencies Bitcoin and Ethereum “posted their largest one-day drop since March last year,” according to Reuters, “with losses in the market capitalization for the entire cryptocurrency sector approaching $1 trillion.”

Despite being priced at over $58,000 earlier this month, Bitcoin plunged to just under $32,000 on Wednesday morning, with a 24-hour low of $30,201.96, according to Coindesk

“Wednesday’s decline extended bitcoin’s loss for the past week to more than 40%,” noted CNBC.

“That means bitcoin has now erased all its gains following Tesla’s announcement that it would purchase $1.5 billion worth of the cryptocurrency. It’s also down more than 50% since hitting a record high of $64,829 in mid-April,” the CNBC report continued.

According to CNBC, other cryptocurrencies also crashed in value, with Ethereum down by more than 30%, while Dogecoin also fell by more than 30%.

Yahoo! Finance explained that the sharp decline was triggered “after China banned financial and payment institutions from providing cryptocurrency services.” According to the BBC, the communist regime also “warned investors against speculative crypto trading.”

This news is the latest in a timeline of turbulent market behavior for various cryptocurrencies. Just days ago, Tesla CEO Elon Musk announced that the electric car company would suspend vehicle purchases with Bitcoin, citing concern over “rapidly increasing use of fossil fuels for Bitcoin mining.”

“Tesla has suspended vehicle purchases using Bitcoin. 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,” wrote Musk.

“Cryptocurrency is a good idea on many levels and we believe it has a promising future, but this cannot come at great cost to the environment,” Musk continued. “Tesla will not be selling any Bitcoin and we intend to use it for transactions as soon as mining transitions to more sustainable energy. We are also looking at other cryptocurrencies that use <1% of Bitcoin’s energy/transaction.”

In response, up to $365 billion was “wiped” off the entire cryptocurrency market.

“At around 6 p.m. ET on Wednesday when Musk made the announcement, the value of the whole cryptocurrency market stood at around $2.43 trillion, according to data from Coinmarketcap.com. By 8:45 p.m., the market capitalization had dropped to around $2.06 trillion, wiping off around $365.85 billion,” reported CNBC.

A few days prior, Musk hosted “Saturday Night Live.” Many cryptocurrency investors watched closely to see if Musk would mention the previously surging Dogecoin. Musk did reference Dogecoin on multiple occasions, including joking with his mother that her Mother’s Day gift was the meme-coin, and admitting to Michael Che that Dogecoin is a “hustle.”

“To the moon!” Musk added, using “a catchphrase popular among Dogecoin enthusiasts.

CNN reported, “After pumping up the value of the cryptocurrency in the lead-up to Musk’s SNL appearance, investors sold off dogecoin sharply after the Musks talked about it on the show. Dogecoin was down 40%, trading as low as 44 cents early Sunday. The cryptocurrency started Saturday trading at around 70 cents and was selling for about 66 cents just before SNL went on the air at 11:30 pm ET.”

The cryptocurrency reached an all-time high of over $0.70 in early May. According to the latest data from Coindesk, dogecoin is priced at just over 36 cents.

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