Bitcoin price plunges into dreaded ‘death cross’ phase fuelling fears of catastrophic meltdown after China crackdown
BITCOIN has plummeted into the dreaded "death cross" phase amid fears of a cryptocurrency meltdown.
It has been tumbling since Friday in the wake of China’s expanding crackdown on crypto-mining, as investors grow more uncertain about the future of the leading currency.
At the time of writing, Coindesk shows the price of bitcoin slumped to as low as $32,250.68 which is down 3.13 per cent in the past 24 hours.
Its fall comes as China continues its tough crackdown on mining and trading the cryptocurrency The country accounts for more than 60 per cent of mining and trading.
After this huge price plunge, several analysts say this has formed what is known as a "death cross".
This is a term to describe when a short-term average trendline crosses below a long-term average one.
This pattern could lead to another major sell-off of the coin.
The opposite trend is called a "golden cross".
The crash follows a year of highs, but Bitcoin is still worth significantly more than it was in March 2020 when it was valued below $5,000 (£3,601).
But it has lost over 20 per cent in the last six days and is down by half from its April peak of almost $65,000.
The last death cross on the bitcoin chart occurred in March 2020 after the cryptocurrency had plunged nearly 60 per cent over a six-day period — and just before it started a historic rally of more than 1,000 per cent over the next year.
5 risks of crypto investments
THE Financial Conduct Authority (FCA) has warned people about the risks of investing in cryptocurrencies.
- Consumer protection: Some investments advertising high returns based on cryptoassets may not be subject to regulation beyond anti-money laundering requirements.
- Price volatility: Significant price volatility in cryptoassets, combined with the inherent difficulties of valuing cryptoassets reliably, places consumers at a high risk of losses.
- Product complexity: The complexity of some products and services relating to cryptoassets can make it hard for consumers to understand the risks. There is no guarantee that cryptoassets can be converted back into cash. Converting a cryptoasset back to cash depends on demand and supply existing in the market.
- Charges and fees: Consumers should consider the impact of fees and charges on their investment which may be more than those for regulated investment products.
- Marketing materials: Firms may overstate the returns of products or understate the risks involved.
Other cryptocurrencies have been hit even harder, with Ethereum down 13.44 per cent and XRP down 11.47 per cent.
Meanwhile, Dogecoin has taken a 28.45 per cent hit.
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