Bitcoin (BTC) the largest cryptocurrency in the world by both price and market capitalization had lost 10.8% of its value in the last 24 hours. The digital token plummeted from $61,396 to $54,750 after reaching an all-time high price of $64,869.78 on Wednesday.
The plunge in the price of Bitcoin and other altcoins followed news coming from the U.S. Treasury. According to Bloomberg and Coinbase, the U.S. Treasury is said to put an end to money laundering through digital currencies and assets.
Bitcoin is a decentralized currency. The digital token isn’t tied to the mainstream financial system and transactions are conducted on a blockchain system online, which makes it hard to track where money is transferred. Therefore, Bitcoin has been used on the dark web and illegal websites for money laundering, drug trafficking, child porn, and other immoral actions.
Bitcoin as a hedge against inflation
The digital token soared to its all-time high levels amid the Covid-19 pandemic. Financial institutions and traders transitioned to Bitcoin instead of gold as a hedge against inflation.
Large companies such as Tesla (NASDAQ: TSLA) invested billions in the digital token. Hence, the interest from billionaires and financial institutions drove the cryptocurrencies to all-time high prices.
Ajit Tripathi, head of institutional business at Aave, said in a recent Citi report: “Bitcoin also has an extraordinary brand value. Even Silicon Valley pundits like Chamath Palihapitiya or Jack Dorsey are essentially bitcoin maximalists – they cannot think beyond bitcoin and do not acknowledge other cryptocurrency innovations.”
“In that sense, bitcoin has some of those religious properties; and such strong sentiments are very valuable if you are trading.” He continued.
Nonetheless, the U.S. Treasury alongside European and international watchdogs has started putting regulations to stop abusing cryptocurrencies. For instance, India said that it will ban trading and mining BTC and other altcoins.
Meanwhile, Turkey’s central bank said on Friday that starting from April 30; the use of cryptocurrencies will be halted and will no longer be a valid form of payment. The central bank of Turkey argued that cryptocurrencies have a risk of “non-recoverable” losses. The bank said the anonymity of digital brings the risk of “non-recoverable” losses.
BTC has soared 800% since last year. On the other hand, the cryptocurrency market capitalization blasted above $2 trillion, and at this pace; the crypto market will become the largest market globally.