The market capitalisation of the most popular cryptocurrency, Bitcoin, fell below $30,000 and declined to $557.89 billion for the first time since January during the 24-hour trading according to Coin Desk.
The cryptocurrency has roughly halved from a record of $65,000 in mid-April, although over the past year it still went up over 200 per cent. The second most popular cryptocurrency, Etherium also slipped by 4.2 per cent at one point.
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Why did Bitcoin drop?
China’s crackdown
One of the main reasons for Bitcoin’s drop is China’s crackdown on cryptocurrencies. The world’s largest cryptocurrency tumbled by as much as 8.5% to $29,766.87, its lowest since January 27, reported at around 7 pm (IST).
With Chinese authorities signalling a more aggressive push to cut down the use of crypto currencies for months now, the prices have fallen. On Monday, the People’s Bank of China called the widely popular online payments platform run by Jack Ma’s Ant Group — Alipay and five big lenders and told them to “comprehensively investigate and identify” cryptocurrency dealers and their exchanges so they could cut off any crypto trading.
Though China doesn’t completely ban cryptos, its regulatory bodies in 2013 had declared that the digital currency was not a real currency and forbade financial and payment institutions from transacting with it.
Chart-watchers said that the digital crypto could have a tough time finding support in the $20,000 range following its drop below $30,000. Still, the crypto had prior to Tuesday breached $30,000 during at least five separate instances this year but recuperated to trade above that level each time.
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Death Cross
Bitcoin experienced a bearish “death cross”, which means that its average price over the last 50 days fell below that of its 200-day moving average. The signal is typically seen as a closely-watched technical measurement by analysts.
Market Manipulation
Many people also believe that the reason of this drop in Bitcoin is a result of Market Manipulation done by Bitcoin Whales (people who own a large amount of Bitcoin). By selling their cryptocurrency in a large amount, Whales are able to drop it’s value, and then buy it again in bulk at a lower price.
Bitcoin was also sent tumbling down last month, after Elon Musk announced via twitter that due to cryptocurrencies not being environmental friendly, his company, Tesla, will not be accepting Bitcoin as a payment for their cars.
Is it safe to invest?
The crypto market is highly volatile, and if you’re looking to invest in it, make sure you’re at least prepared to hold it for a few years. Investing heavily in cryptocurrencies can either lead to a huge loss or a huge profit. The bull market is not yet over and the drop in crypto might continue for a while, but if you are looking at it as a long term investment, then it is safe to invest in Bitcoin or other cryptocurrencies.
“Any meaningful break below $30,000 is going to make a lot of momentum players to throw in the towel,” said Matt Maley, chief market strategist for Miller Tabak + Co. “Therefore, even if Bitcoin is going to change the world over the long-term, it does not mean it cannot fall back into the teens over the short-term.”
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