With Bitcoin (CCC:BIT-USD) down more than 13% in the last 24 hours and below $40,000 a piece, cryptocurrency investors are assessing if the drop is a “normal” correction or full-on crypto carnage after regulators in the U.S. and China turned up their scrutiny.
Second-biggest Ethereum (CCC:ETH-USD), along with Cardano (CCC:ADA-USD) and Dogecoin (CCC:DOGE-USD), weakened 20%. XRP (CCC:XRP-USD) depreciated 14.9% from a seven-day high price of $1.7022 yesterday.
Several of China’s banking and finance watchdogs told that country’s financial institutions and payment transfer operators to halt their participation in any crypto-related transactions. The ban goes for crypto-related services provided to clients, as well.
“Prices of cryptocurrency have skyrocketed and plummeted recently, and speculative trading has bounced back. This seriously harms the safety of people’s property and disturbs normal economic and financial orders,” said a statement from regulators supervised by the People’s Bank of China and the China Insurance and Banking Commission.
Washington Sets Sights on Crypto Review
And while that was happening in Beijing, regulators in Washington are set to review all of the U.S. Office of the Comptroller of the Currency’s (OCC) pending matters, interpretative letters and guidance, including issues around digital assets and cryptocurrencies. The move comes after cryptocurrencies got a warm reception under former Acting Comptroller Brian Brooks.
But now there’s a new sheriff in town. Michael Hsu, the new acting comptroller, said his predecessor’s “initiatives were not done in full coordination with all stakeholders. Nor do they appear to have been part of a broader strategy related to the regulatory perimeter. I believe addressing both of these tasks should be a priority.”
Those comments were released ahead of Hsu’s appearance later today before the House Financial Services Committee in a hearing slated to include all of Washington’s federal bank regulators.
Those mulling whether the drops are “normal” can take stock in comments from Vijay Ayyar, head of business development at crypto mart Luno, who told CNBC that a 30%-40% pullback is standard during bitcoin bull markets. “So this is very much expected after we topped out at 64K ($64,000).”
The crypto carnage comes as investors were already reeling after a May 12 move by Tesla (NASDAQ:TSLA) to suspend electric vehicle purchases using Bitcoin. Once seemingly Bitcoin’s biggest fan, CEO Elon Musk has been silent on cryptocurrencies since May 13, when he tweeted, “To be clear, I strongly believe in crypto, but it can’t drive a massive increase in fossil fuel use, especially coal,” to his 55 million-plus followers.
On the date of publication, Robert Lakin did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
InvestorPlace contributor Robert Lakin is a veteran financial writer and editor, including previous stints with Bloomberg News and as a buyside equity research editor.