Here’s why Bitcoin fell again today

[ad_1]

What happened

The price of Bitcoin (CRYPTO: BTC) plunged for the second day in a row on Tuesday. Perhaps one of the reasons for this decline is the decision of the US Treasury Department to sanction a cryptocurrency exchange. As of 3:41 p.m. EDT, Bitcoin had fallen 3.6% in the previous 24 hours.

So what

The value of the world’s largest cryptocurrency had already fallen by around 7% on Monday, with investors worried that one of China’s biggest real estate developers, China Evergrande Group, could default on some of its loans.

Image source: Getty Images

Investors fear that if the Chinese government does not step in and help Evergrande, companies that do business with it and those that hold its debt could also find themselves in trouble.

This thinking propelled the S&P 500 down 2% on Monday and also pushed cryptocurrency prices down.

But the Bitcoin slide on Tuesday might have more to do with the Treasury Department announcing it will sanction the Suex cryptocurrency exchange for its alleged role in laundering payments made to criminals carrying out ransomware cyber attacks. .

“Analysis of known SUEX transactions shows that over 40% of SUEX’s known transaction history is associated with illicit actors,” the Treasury Department said in a press release on Tuesday.

Cryptocurrency prices tend to react strongly to any positive or negative economic news, and they are especially volatile with major crypto news.

Now what

Tuesday’s news suggests that more scrutiny and regulation may be on the horizon for cryptocurrencies. That’s not bad at all for investors, of course, and might even make cryptocurrency investing more secure in the near future.

But in the short term, traders will continue to react strongly to any news that the government extends its oversight of cryptocurrencies, which could mean increased volatility for Bitcoin. Its drop today is further proof that investors will need strong stomachs to stay in the crypto market for the long term.

This article represents the opinion of the writer, who may disagree with the official recommendation position of a premium Motley Fool consulting service. Were motley! Questioning an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.

[ad_2]